The Reserve Bank of Australia (RBA) will announce its policy decision on Tuesday at 2.30 pm AEST. After recent inflation figures from the US and strong employment numbers in Australia, speculation is building on whether the RBA should abandon its current loose monetary settings.
Several possible scenarios exist from extending its A$100 billion QE program for six months from the September expiry date to ceasing QE and adopting a more flexible approach based on the new data and economic forecasts. The market is yet to price in a change in policy settings. The RBA may decide that given subdued Australian inflation and the slow vaccination progress that a cautionary, no change path is the best course.
Investors should watch the Australian Dollar (AUD) for an immediate reaction. Technical analysts point to a break above 0.7600 – 0.7645 or a close below 0.7400 – 0.7338 as reflective of the two scenarios.