Well, they’ve disagreed before.
That tag line is in response to the emergent difference between the cash rate futures market (which makes bets on where near term policy settings will go) and the actual rate, as set by the RBA.
The RBA Governor, Philip Lowe, has pointed to the market disconnect as an outright error, and for the most part stuck to the narrative of no near term hikes (out to 2024). He thinks the bond market has it wrong.
Historically, the market is usually right, and a central bank is often merely following the market, which, in turn is attempting to follow the natural rate, based on estimates of expected growth, inflation and term premia.
That 2017-18 disagreement was in response to all the hawkish sounding throat-clearing, from the RBA, that never eventuated. It is the reverse now.
Not much implication for us. We think the AUD is about right at $0.75c, plus or minus a few cents (which is as close as we can ever get it, by range) with risks in general to the downside (over things like the sustainability, or otherwise, or iron ore).
We continue to see cyclical upside pressure on rates, and we continue to see pressure on long duration growth stocks, alongside pressures in discretionary retail, as a result of the shift in spending from goods to services as the economy reopens.
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