The Reserve Bank of Australia will announce its monetary policy decision on Tuesday, August 3. As we get closer to the release time, here are the forecasts by the economists and researchers of seven major banks regarding the upcoming central bank's decision. The latest coronavirus developments hint at a dovish shift from policymakers.
As FXStreet’s Chief Analyst Valeria Bednarik notes, AUD/USD is bearish and could fall to fresh 2021 lows with the RBA’s announcement.
Deutsche Bank
“We think the lockdown in Sydney (at significant short-term economic cost) means that they’ll suspend their tapering of bond purchases until November.”
SocGen
“We expect that the policymakers will announce to postpone the tapering until the recovery of the economy from the current outbreak is confirmed. The RBA will also revise its GDP forecasts to reflect the impacts from the current outbreak: cutting the growth in 2021 and raising the growth in 2022. A good deal of uncertainties in both the economy and monetary policy due to COVID-19 outbreak is likely to persist until 4Q21.”
TDS
“The RBA's 'Recovery to Expansion' narrative no longer holds given the prolonged Sydney lockdown. GDP and unemployment rate downgrades in the Aug SoMP will lend a dovish tone. We expect the Bank to reverse their Sep taper with QE staying unchanged at A$5 B from Sep'21. We shift our call on the stock under Flexible QE from 'up to A$100 B' to A$130 B.”
ING
“The RBA will probably leave all aspects of their current stance unchanged despite a pickup in inflation in 2Q21. Market participants are still waiting to see whether the price spike in Australia pushes into wages. That said, the latest batch of COVID-19 induced lockdowns may encourage the RBA to take an even more dovish approach to previous guidance on asset purchases later this year.”
Westpac
“Given the sharp unexpected deterioration in the economy the Board should send a clear signal that it continues to be committed to supporting the Australian economy with an immediate increase of weekly bond purchases to A$6 B. It should also announce a deferment of the taper from A$5 B to A$4 B that was planned for early September. It should commit to maintaining the A$6 B purchase pace through to the November Board meeting in recognition of the economy’s sudden deterioration and the uncertainty around the recovery phase.”
ANZ
“We think the RBA will announce a delay to its intended September tapering of bond purchases given the downside risks to the economy are greater than when it decided on the taper in early July.”
UOB
“Following the RBA’s meeting in July, we have affirmed our view that the conditions for rate hikes are unlikely to be met until at least late 2023. Meanwhile, we expect its QE program to be extended again in November, with a further reduction in the pace of purchases likely.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades with negative bias, holds above 1.0700 as traders await US PCE Price Index
EUR/USD edges lower during the Asian session on Friday and moves away from a two-week high, around the 1.0740 area touched the previous day. Spot prices trade around the 1.0725-1.0720 region and remain at the mercy of the US Dollar price dynamics ahead of the crucial US data.
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 core inflation forecasts, disappointing the Japanese Yen buyers.
Gold price flatlines as traders look to US PCE Price Index for some meaningful impetus
Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. The weaker US GDP print and a rise in US inflation benefit the metal amid subdued USD demand. Hawkish Fed expectations cap the upside as traders await the release of the US PCE Price Index.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US economy: Slower growth with stronger inflation
The US Dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.