• Australia’s benchmark interest rate is set to stay unchanged at 4.35% in November.
• The focus remains on Reserve Bank of Australia Governor Michele Bullock’s comments and updated economic forecasts.
• The Australian Dollar could wilt if RBA Governor Bullock ramps up bets for a December rate cut.

The Reserve Bank of Australia (RBA) is expected to sit tight yet again on its monetary policy, extending the pause into the eighth straight meeting on Tuesday.

The RBA is set to maintain the Official Cash Rate (OCR) at 4.35% after its November policy meeting. The decision will be announced at 03:30 GMT, followed by Governor Michele Bullock’s press conference at 04:30 GMT.

Reserve Bank of Australia to stand pat again

With a no-rate change decision fully priced in this month, the market’s attention will be on the RBA’s updated economic forecasts and Governor Michele Bullock’s press conference for fresh hints on the timings of the central bank’s first interest rate cut since its post-covid tightening cycle.

Sticky underlying inflation and tight labor market conditions continue to back the case for a cautious stance by the Australian central bank.

The RBA’s preferred inflation gauge, the annual Trimmed Mean Consumer Price Index (CPI), slowed to 3.5% from 4.0% in the third quarter but stayed above the Bank’s 2%-3% target. The service-sector inflation also remained elevated.

Additionally, the RBA’s annual report, published on October 25, reiterated that inflation would not be sustainable within the 2%-3% target for ‘another year or two’. 

Meanwhile, the Australian economy added 64,100 jobs in September, beating the estimated net gain of 25,000 jobs. Of the new jobs created in September, 51,600 were full-time roles. The Unemployment Rate stood unchanged at 4.1% in September, against the forecast of an increase to 4.2%.