Week Ahead: RBA and BOC to Hold Rates but Might Be Tempted to Hike, OPEC+ Meets
XM Group | Jun 02, 2023 06:54AM ET
Will the RBA deliver another surprise hike?
The Reserve Bank of Australia caught markets off guard when it hiked rates last month and there’s a risk that policymakers could again lift borrowing costs higher by 25 basis points when they hold their June meeting on Tuesday.
However, the economic data has been somewhat mixed lately so the RBA might decide to pause again to get a better picture of what is happening in the economy. The jobless rate edged up slightly in April and the flash PMIs pointed to a modest softening in economic activity in May. However, monthly inflation readings for April were hotter-than-expected.
First quarter GDP growth figures are due on Wednesday but might come too late for the RBA to fully factor the data into its decision. Also out on Wednesday is the AIG (NYSE:AIG) manufacturing index.
Communication from the Fed has been rather conflicting heading into the June 14 FOMC decision, but more recently, it appears that the doves, likely led by Chair Powell himself, are building a case to sit out the next meeting.
There is still one more CPI report on the way before then, but the ISM PMI will have some significance given the growing divisions within the Fed.
If the odds start to shift again in favour of a June hike, the US dollar could find itself back on the front foot.
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