Daily Flows & Insights – RBA Holds & Doesn’t Reinforce Tightening Bias

Daily Flows

  • Today, Bendigo has launched a 3 year fixed/floating MTN with an initial price guidance of 3mBBSW +105.
  • Significant flow was directed to Judo bank yesterday who were showing an outstanding rate of 5.35% for 1 year.
  • With liquidity tightness creeping into the NCD space, 3mBBSW +50 is being offered to retain funds.

RBA Holds & Doesn’t Reinforce Tightening Bias

  • The RBA elected to hold the OCR at 4.35% yesterday for the May 2024 meeting. This was an expected outcome with 30 out of 31 economists forecasting a no change and minimal chance of a hike priced in by markets.
  • Markets were expecting a more hawkish delivery of the hold and were surprised that an explicit tightening bias was not readied.
  • The board still kept options open as always “not ruling anything out… remaining vigilant to the upside risks of inflation”.
  • In the post meeting press conference, Michelle Bullock noted that inflation would have to be significantly higher than their updated forecasts to warrant a hike.
  • Going forward the persistence of services inflation well remain the most important factor in determining monetary policy. It is this paired with the Q1 CPI inflation coming in higher than expected which has seen the RBA raise their Q4-24 forecast by 0.6% to 3.8% YoY.
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Curve Team
Sarah McGirr