The Reserve Bank Board meets on November 6. The Bank will also release the November Statement on Monetary Policy on November 9. Of course the Governor will announce that there has been no change in the cash rate.
Readers will be aware that Westpac adopted a "no change" call for both 2018 and 2019 back in September 2017. At that time markets were pricing in three hikes by end 2019.
Today, markets are pricing only the probability of around 50% of one hike by end 2019 and a full 25bps is not priced-in until end 2020.
Back in August this year, Westpac forecast that the cash rate would remain on hold in 2020.
So, while a year ago we were offering readers some forecasts that were significantly at odds with market pricing, our views today are now largely factored in by the market.
That does not mean that our views are universally supported. In the latest Bloomberg survey of economists' forecasts, only 10 of the 24 forecasters expect the cash rate to be on hold (one is calling cuts) by end 2019. In addition, 9 of those 13 forecasters expecting rates to be rising expect multiple hikes. Note that the other three major Australian banks expect rate hikes next year.
So the case for rates on hold is certainly not a universally accepted one.
As usual we will scour the Governor's statement next Tuesday for any hints towards a firmer tightening bias, but there is unlikely to be much to encourage these efforts.
The Statement's themes will be the same: continuing global expansion; China slowing a little; international trade uncertainty; Australian growth to average a bit above 3% in 2018 and 2019; positive business conditions; household consumption a source of uncertainty; labour market outlook positive; wages growth low; but a gradual lift in wages growth expected; further gradual decline in the unemployment rate expected; inflation higher in 2019 and 2020; housing conditions in Sydney and Melbourne continue to ease; progress toward full employment and target inflation will be gradual.
The Statement on Monetary Policy will include an update of the Bank's forecasts out to December 2020.
Forecasts for GDP growth are likely to be unchanged from the August Statement on Monetary Policy: 3.25% in 2018 and 2019; and 3% in 2020. These forecasts indicate above potential growth, which is generally accepted to be 2.75%.
Headline Inflation forecasts in August were 1.75% in 2018; 2.25% in 2019; and 2.25% in 2020.
With higher petrol prices than were expected in August, the RBA may raise its forecast for headline inflation in 2018 from 1.75% to 2%.