RBA expected to keep rates on hold, next movement up: HSBC

A new report from HSBC Global Research’s chief economist Peter Bloxham said that the RBA is expected to keep rates on hold next week with the next movement expected to be up.

While this has been expected for the last couple of months, Bloxham made an interesting observation of what must be watched in the next statement from RBA governor Glenn Stevens.

It’s all in the wording.

“A key thing to watch out for will be a possible language change in the statements,” Bloxham explained.

“For the past six months, the RBA has been stating that a 'period of stability' in rates was likely; however, with rates now having been stable for almost a year that language may change, simply because there has already been a long period of stable rates.”

He noted that Stevens had warned about a forthcoming language change, but said that it was not necessarily an indication that rate hikes were being considered.

Next week, Bloxham expects the RBA to reiterated that the Australian dollar remains higher than they would like it to be, and to revise down CPI forecasts.

Sentiment was also noted to be improving.

{module When do you think the next RBA movement will be?}