Goldman is licking its wounds after over-hawking the RBA yesterday:
Bottom line: The RBA increased the cash rate +25bp to 2.60% at October’s Board meeting, a dovish surprise relative to consensus expectations (21/28 economists expected +50bp, including GS) and market pricing (for ~+42bp). In the attending statement, the RBA’s characterization of domestic macro trends was little changed, with the dovish shift linked more to concerns about a deteriorating global outlook. In addition, the RBA noted that ‘the cash rate has been increased substantially in a short period of time’, affirmed that it ‘remains resolute’ in returning to inflation to target, and flagged that it ‘expects to increase interest rates further over the period ahead’.In our view, today’s dovish surprise underscores that the RBA is wary about the risk of overtightening in an uncertain global environment and it does present downside risk to our forecast 3.60% terminal rate. Even so, absent an unexpected global shock, we continue to expect the RBA will need to take policy to the restrictive side of the Governor’s recent 2.50-3.50% estimate of the ‘neutral policy’ range – albeit more slowly than previously forecast with 25bp increases at each of the next four RBA meetings (in Nov/Dec 2022 and Feb/Mar 2023).
Not that it was alone. Of the majors, only CBA’s Gareth Aird called it right.
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