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Aussie interest rate traders are betting on the possibility of a rate hike next month after RBA Governor Philip Lowe warned on how high the cash rate would need to rise to curb inflation.
“Whether monetary policy has more to do remains to be seen,” Lowe said today, which sounded dovish enough compared to last week’s statement.
The OIS contract for the August meeting fell below 4.2%, indicating about a 50% chance of a rate hike, down from 68% on Monday.
Employment and inflation data still to be released this month may play a decisive role in the RBA’s actions, but the market judges that the RBA is very open to these data.
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