The RBA meet on Tuesday November 3 and rate cuts are widely expected:
- a 15bp rate cut to the cash rate, which will bring it to 0.1% from its current 0.25%
- also a 15 bp cut to its 3-year yield target and term lending facility (taking these also to 0.1%)
- a QE programme for the longer bonds, 5-to-10 years
There is more at the preview I posted earlier, link here.
ING have issued a note, this in very brief from it, and they think further QE is more likely than rate cuts.
- Our preferred approach would be for the RBA to adjust its current yield curve control (YCC), which to be clear, is already a form of constrained Quantitative Easing (QE).
ING add some AUD thoughts:
- we see the balance of risks clearly skewed to the upside for AUD ahead of the meeting, the vicinity to the first projections for the US election (late European night on 3 November) will likely keep the RBA impact rather short-lived.
- AUD can be the key beneficiary of a landslide win by Joe Biden – i.e. the most market-friendly scenario – and would probably be a key underperformer in the market-adverse cases of a contested result or Trump victory.