Daily Commentary BY THE CURVE TEAM –

Key Day for RBA

21st of May, 2019

With plenty of uncertainty over the economy and monetary policy, today will be a day where the RBA can provide some much needed clarity.

Rather than provide the market with some clarity in their quarterly statement on monetary policy, the RBA’s updated forecasts only added more uncertainty to the outlook for monetary policy. The RBA remains steadfast in their central outlook. However their forecasts are based on the assumption that rates move in line with market pricing, which suggests two cuts.

Before the Governor Lowe speaks at lunch time, the RBA will release the minutes of their May Board meeting. Usually there would be largely redundant and superseded by the subsequent release of their quarterly statement. However given the uncertainty and mixed messaging from the RBA, these will be closely watched for any clues on the outlook ahead of Lowe’s key speech.

The market will then be looking for clarity from the RBA when Lowe delivers his speech at Economic Society of Australia Lunch which is aptly titled ‘The Economic Outlook and Monetary Policy’. 

Today’s speech gives the RBA the opportunity to clear up any uncertainty and give the market clarity on the outlook. With the election now out of the way and providing households and businesses a little more certainty around the outlook for fiscal policy, confidence could receive a much needed boost if the RBA gets its communication right today.

David Flanagan

Director - Interest Rate Markets