RBA expected to maintain status quo
Having increased rates by 425 basis points since May 2022, traders are now anticipating signals indicating a potential rate cut from the RBA.
China's CPI forecasts predict a continued negative trend at -0.5%, hampered by weak consumer demand.
China’s blue-chip CSI300 Index plunged by up to 2.1%, reaching a five-year low,
The RBA is expected to maintain the status quo in its upcoming meeting, but there's a nearly 50% chance of a rate cut by May.
On the Market Watch:
The upcoming Tuesday meeting of the Reserve Bank of Australia is anticipated to result in a status quo, with no expected changes. However, markets are indicating a just under 50% likelihood of a rate cut by May.
The RBA is likely to push back on any premature policy easing as inflation remains consistent. The RBA has raised rates by 425 basis points since May 2022 to a 12 year high of 4.35%.
The Aussie has been pushed downwards as the dollar regained strength last week, with prices pinned near a 2 and half month low at 0.6505.
China's Consumer Price Index (CPI):
Forecasts indicate that inflation will continue to be in the negative, dropping to -0.5%, On the back of the Lunar New Year. Weakness in consumer demand is exerting pressure on Chinese markets as well.
Chinese markets have already been struggling with the blue-chip CSI300 Index plunging by up to 2.1%, reaching a five-year low, while the Shanghai Composite Index experienced a decline of as much as 3.5%, following a 6.2% drop in the previous week. Affected by stagnant economic indicators in China and a dwelling property sector.
Earlier today, the Caixin Purchasing Managers' Index (PMI) indicated an expansion, but at a slower pace than anticipated, falling short of expectations at 52.7 compared to the forecasted 53.0.