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Expect little material change to RBA’s forecast profile - Deutsche Bank

FXStreet (Bali) - According to Deutsche Bank, the central expectation for today's RBA is that the Bank’s forecasts and policy assessment will remain unchanged from previous releases.

Key Quotes

"We expect little material change to the RBA’s forecast profile for activity compared to the outline provided in the August SMP, with the Bank noting in the October Board meeting minutes that the June quarter national accounts were ‚in line with the forecasts published in the August Statement on Monetary Policy‛. The October minutes also note that ‚more recent data and liaison had suggested that moderate growth of consumption had continued into the September quarter.‛ Similarly, the Q3 CPI data were consistent with the trajectory provided in the August SMP for both headline and core inflation."

"Against this backdrop, our central expectation is that the Bank’s policy assessment will also remain unchanged – specifically, that ‚the most prudent course is likely to be a period of stability in interest rates‛."

"Nonetheless, there is some risk that the RBA may use the November SMP (coupled with the November Board meeting) to alter the reference to a ‚period of stability‛ in policy settings. As the RBA Governor noted in a speech in July, ‚long before any thought were to be given to an increase in rates, it would probably be sensible for the Board to cease references to a future ‘period of stability’ and revert to the more normal formulation that the stable policy settings ‘remained appropriate’ or something like that.‛ This risk of this ‘tweak’ appearing in November is partly driven by the communication gap over the Christmas period (which delays the Bank’s next major communication opportunity until February next year)."

"Finally, we do not expect much discussion of (ongoing) macroprudential policy deliberations. The Bank made its position on macroprudential policy clear in the September Financial Stability Review, and we suspect it to maintain a demarcation of macroprudential matters from the discussion of monetary policy that frames the SMP."

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