The Reserve Bank of Australia (RBA) will announce the latest monetary policy decision on Tuesday at 04:30 GMT. The central bank is forecasted to keep interest rates unchanged at a record level of 0.25% and to maintain its yield curve control policy (YCC).
Probability of decision as the case may be
Analysts at TD Securities said in a research note, “RBA’s comment in the past month makes it clear that the board is satisfied with current monetary policy settings. As we expect no changes in this week’s meeting . ”
Meanwhile, analysts at Standard Chartered noted that “RBA’s YCC has done a good job of meeting 3Y interest rates. It resumed bond purchases in August, following the re-enactment of the lockdown in Melbourne.” Further monetary easing can be provided. We believe that the impediment to the forward rate. The more the YCC cuts or amendments, the greater the success of its YCC measures will enable the RBA to stay on the sidelines in the near term. ”
And while the central bank is likely to indicate that the coronovirus-induced recession has not worsened as initially feared, it suggests the recovery will be uneven and bumpy.
The central bank will be focused on the damage and exchange rates caused by the lockdown in Victoria.
The status quo policy will likely have a negligible impact on the Australian dollar pair. That said, the RBA may try to talk below the Australian dollar, as the AUD / USD pair has risen nearly 1,400 pips in the last 5-1 / 2 months. The currency pair may move on to the Federal Reserve’s recent decision to adopt a more comfortable approach to controlling inflation.
About RBA Rate Decision
The RBA interest rate decision is announced by the Reserve Bank of Australia. If the RBA disregards the inflationary outlook of the economy and raises interest rates for AUD it is positive, or sharp. Similarly, if the RBA has a critical outlook on the Australian economy and it maintains the continuing interest rate, or the interest rate cuts are viewed as negative, or bearish.