AUD: RBA hike expectations offer support – BBH

FXStreet Insights Team FXStreet

Brown Brothers Harriman’s (BBH) Elias Haddad expects the Reserve Bank of Australia to deliver a second consecutive 25 bps hike to 4.10%, though it is described as a close call. Futures imply slightly better than even odds of a move. Haddad’s base case is that a hike would provide some support to the Australian Dollar against a backdrop of elevated domestic inflation.

Back-to-back RBA hike seen likely

"Reserve Bank of Australia (RBA) is expected to deliver a back-to-back 25bps cash rate target hike to 4.10%, but it’s a close call. Cash rate futures imply 53% odds of a hike."

"Our base case is for the RBA to raise rates, which will offer AUD some support."

"Australia headline inflation is running high at 3.8% y/y even before the energy shock hits, and all the RBA’s internal models show a positive output gap consistent with tighter capacity constraints."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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FXStreet Insights Team

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