️ Highlights:
Top 5 takeaways from the article:
1. The RBA Rate Indicator shows market expectations of a change in the Official Cash Rate set by the Reserve Bank of Australia.
2. The indicator calculates a percentage probability of an RBA interest rate change based on market determined prices in the ASX 30 Day Interbank Cash Rate Futures.
3. The RBA Rate Indicator is updated at the end of each business day to reflect any changes in expectations.
4. The current official cash rate set by the RBA is 4.10%.
5. As of September 11th, the market is indicating a 9% expectation of an interest rate decrease to 3.85% at the next RBA Board meeting on October 3rd, 2023.
Introduction
The RBA Rate Indicator is a pivotal tool that delineates the market anticipations regarding alterations in the Official Cash Rate (OCR) as stipulated by the Reserve Bank of Australia. This instrument calculates a percentage probability of a fluctuation in the RBA interest rate grounded on the market-determined prices in the ASX 30 Day Interbank Cash Rate Futures.
Current Market Dynamics
As of the recent update, the RBA has maintained the official cash rate at 4.10%. This decision was upheld in the RBA board meeting held on September 5, 2023. The forthcoming board meeting is slated for October 3, 2023, where the official cash rate announcement will be made.
Market Expectations
The ASX 30 Day Interbank Cash Rate Futures for October 2023 was trading at 95.92 as of September 15, 2023. This translates to a 9% market expectation of a rate decrease to 3.85% in the upcoming RBA board meeting. The table presented in the content illustrates the fluctuating market expectations of an interest rate change, offering a day-to-day analysis to gauge the alterations in market sentiment post each trading day.
Analytical Insight
The RBA rate indicator serves as a market monitor providing insights into the official cash rate expectations in Australia. It is updated at the end of each business day, offering a dynamic view of the changing market expectations.
Historical Perspective
The Target Rate Tracker leverages the 30-day cash rate futures implied yields to calculate the probability of changes to the Overnight Cash Rate. It is pertinent to note that the Overnight Cash Rate has predominantly aligned with the Cash Rate Target, albeit with occasional disparities owing to prevailing market conditions.
Disclaimer
The information presented is indicative and should not be perceived as investment advice. Individuals are encouraged to seek professional counsel to assess the implications of the information in their specific circumstances. The ASX Limited and its affiliated entities do not bear responsibility for any inaccuracies or omissions, including those stemming from negligence, or for any repercussions arising from reliance on the information presented.