Westpac economists are confident the Reserve Bank of Australia will leave the cash rate unchanged at its next policy meeting on 1 April, describing the gathering as a “dead rubber” in the context of the broader monetary policy outlook.
While the bank maintains its call for a rate cut in May, it argues that consecutive moves in February and April were never likely—particularly given the hawkish tone the RBA struck at its last meeting. “The Board made it clear that February’s cut was not a signal of more to come,” Westpac noted, adding that a follow-up move in April would risk undermining the RBA’s credibility.
Recent data has largely aligned with or come in slightly softer than the central bank’s own forecasts. The monthly inflation indicator suggests underlying, or trimmed mean, inflation remains at or below the RBA’s expectations. Meanwhile, the federal government’s decision to extend electricity rebates by six months is expected to delay any rebound in headline CPI. However, Westpac expects the RBA to look through this and remain focused on core inflation measures.
Other fiscal measures unveiled in recent weeks—including tax and spending initiatives—are seen as too modest to materially alter the central bank’s view, despite some short-term shifts in market pricing.
Looking ahead to May, Westpac says inflation data will once again take centre stage. “So much hinges on whether trimmed mean inflation prints at 2.7% or 2.5% in the March quarter,” the bank said, noting that even a small downside surprise could solidify its expectation for a further easing cycle to begin in May.
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The Statement from the RBA on April 1 will be at 2.30 pm Sydney time
- 0330 GMT
- 2330 US Eastern time
Reserve Bank of Australia Governor Bullock will follow up an hour later with her news conference.
