Reserve Bank of Australia meeting coming up on February 7: "to hike the cash rate by 25bp"<p>The Judo Bank / Market Australia flash PMI data is here:</p><p class="article-slot__title title top"><a href="https://www.forexlive.com/news/australian-january-preliminary-pmi-manufacturing-498-prior-502-20230123/" rel="follow" target="_self" class="article-link">Australian January preliminary PMI, manufacturing 49.8 (prior 50.2)</a></p><p>Analysis in that report is from Warren Hogan, Chief Economic Advisor at Judo Bank. Hogan is a very well respected economist in Australia and is worth paying attention to. </p><p>From the report, his quick preview of what's coming up from the RBA:</p><ul><li>"<a href="https://www.forexlive.com/terms/i/inflation/" class="terms__main-term" id="ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa" target="_blank">Inflation</a> pressures may abate somewhat but the risk forthe RBA is that inflation remains stubbornly high well into2023. This could maintain upward pressure on inflationexpectations and wages growth. On this basis it seemspremature for the RBA to pause the current tighteningcycle. Australian interest rates are low by any standardexcept that of the last few years. Real interest rates remaindeeply negative leaving monetary policy well below mostlong-term concepts of 'neutral'. Australian interest ratesare well below those in other advanced economies facingsimilar inflation risks.</li><li>"We expect the RBA to hike the cash rate by 25bp in eachof February and March before an extended pause. Furtherrate hikes may be required later in 2023 if the economyand inflation prove more resilient than current consensusforecasts suggest."</li></ul><p>-</p><p>I don't always agree with the analysis I see but I do with this. </p><p>As I have said many times before in my own thoughts of what the RBA will do in February, a hike is the only reasonable thing to do given this, from the front page of the RBA website:</p><p>The RBA is forecasting inflation to fall, and I've seen opinion that this is the basis for the Bank pausing now, i.e. no need for a hike in February. I disagree and, if any of the folks at the RBA are reading this, please recall how poor the bank's forecasts usually are. Use the data, don't try to second guess it. </p>
This article was written by Eamonn Sheridan at www.forexlive.com.
Source: Reserve Bank of Australia meeting coming up on February 7: "to hike the cash rate by 25bp" (https://www.forexlive.com/centralbank/reserve-bank-of-australia-meeting-coming-up-on-february-7-to-hike-the-cash-rate-by-25bp-20230123/https://www.forexlive.com/centralbank/reserve-bank-of-australia-meeting-coming-up-on-february-7-to-hike-the-cash-rate-by-25bp-20230123/)
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