Economists have urged caution over the inflationary threat of soaring global oil prices and sticky price pressures ahead of Michele Bullock’s first board meeting at the helm of the Reserve Bank.
The RBA is due to meet on Tuesday for its October rates decision, where it is widely expected to extend its hold the cash rate at 4.1 per cent as it awaits the delayed impact of the 12 previous hikes.
Typically, changes to interest rates take about 12 to 18 months to flow through the economy to fully impact households and businesses.
Due to an increase in fixed-rate lending during the pandemic, some analysts believe the transition may be even slower through this tightening cycle.
While traders have ascribed just a one-in-10 chance that the RBA will increase the cash rate to 4.35 per cent when it meets on Tuesday, the likelihood of a hike before the end of the year now sits at 62 per cent.
With financial markets in Australia and further abroad firming on the view that rates will need to stay higher for long to curb inflation pressures, Commonwealth Bank pushed its forecast for the RBA’s first interest rate cut to May 2024, two months later than earlier anticipated.
The JOLTS report will kick off the first of three updates on employment in the U.S. The number of job openings is expected to remain around 8.8 million, which is down from the peak 11 million.
With the NFP looming, the outlook remains uncertain. More on this, later this week.
Have your trading charts ready this week!
This Week’s High Impact Events
The times below are GMT +3.
Monday 2nd October
17.00 – US – ISM Manufacturing PMI
Potential instruments to Trade: USD Crosses.
18.00 – US – Fed Chair Powell Speaks
Potential instruments to Trade: USD Crosses.
Tuesday 3rd October
06.30 – Australia – Cash Rate, RBA Rate Statement
Potential instruments to Trade: AUD Crosses.
09.30 – Switzerland – CPI m/m
Potential instruments to Trade: AUD Crosses.
17.00 – US – JOLTS Job Openings
Potential instruments to Trade: USD Crosses.
Wednesday 4th October
04.00 – New Zealand – Official Cash Rate, RBNZ Rate Statement
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