RBA Forecasts Based On Economists And Market Pricing For Cash Rate

(This story was first published on Friday, February 4 at 11:47 AM as an email to premium subscribers)

By Sophia Rodrigues

(Sydney, February 4, 2022)—For the first time ever, the Reserve Bank of Australia has taken account of forecasts of cash rate by professional economists while assuming a path for interest rate in its forecasts for the Statement on Monetary Policy published Friday.

The RBA has derived a path for cash rate based on both economists and financial market pricing, compared with just market pricing that it has been assuming in the last few years.

The inclusion of economists’ forecasts means the RBA has assumed less cash rate hikes than what it would have done if it only factored in market pricing.

Since February 2015, the RBA has been assuming market pricing while making its forecasts for the economy. Prior to that it assumed the cash rate remained unchanged at the level at the time.

--Contact: Sophia@centralbankintel.com