Hawkish rhetoric is evident from RBA today? - Nomura

The biggest talking point in markets over the past week or so has clearly been the surprise shift in tone from some of the world’s big central banks.

Key Quotes:

"More hawkish rhetoric is evident as a greater focus on financial stability risks emerges. Now it is probably too aggressive to say that this shift has been coordinated, but when it is broader than just the Fed (which is really all it has been up until recently), the message becomes a stronger one, and signals the low interest rate, QE-era, is coming to an end.

The question for us in this part of the world is whether the RBNZ and RBA are about to join the fray, and shift more hawkish as well. Our short answer to that is no (at least not yet). While financial stability considerations are of course relevant for New Zealand and Australia, the latest macro-prudential efforts in both countries appear to be having some effect and credit cycle dynamics (out-of- cycle interest rate hikes) are also taking pressure off the central banks to respond.

We suspect the RBNZ and RBA will remain watchful bystanders to this shift in tone for now, assessing what it could mean for asset valuations, yields and currencies.

The RBA this afternoon will of course provide an early test to that, but we expect little change in tone overall. "