RBA decision in focus as AUD traders weigh Bullock’s tone and 2026 hike risk
The Reserve Bank of Australia is widely expected to keep its cash rate unchanged today, but guidance from Governor Michelle Bullock could swing market expectations and spark moves in the Australian dollar and bond yields.
What traders are watching
While the policy rate is seen on hold, markets have nudged up longer-dated hike risks, with derivatives implying at least one increase by 2026. Near-term, pricing suggests roughly a one-in-three chance of a hike by March—odds that could shift if the statement or press conference leans more hawkish on persistent inflation pressures.
The decision lands at 14:30 Sydney time (03:30 GMT; 22:30 New York), followed by a news conference an hour later. Three hours before the decision, the November NAB Business Confidence survey will offer an updated read on activity and pricing power into year-end.
FX and rates setup
Pre-positioning has kept AUD/USD sensitive to changes in rate path expectations. A firmer inflation assessment or pushback against early easing hopes would likely buoy the Aussie and lift front-end yields, while a balanced or dovish-leaning tone could see AUD drift lower and the curve bull-steepen. Liquidity is thinning into the holiday period, raising the risk of outsized moves on headlines.
Beyond the statement, traders will parse any commentary on services inflation, unit labor costs, and domestic demand resilience. The RBA’s assessment of global growth—especially China-sensitive terms of trade—will be key for equity risk appetite and commodity-linked FX.
Data ahead of the decision
The NAB survey will help frame corporate pricing intentions and capacity utilization heading into 2026. A softening in confidence alongside stable “prices received” components would argue for patience, whereas a re-acceleration in cost pressures could embolden hawkish rhetoric later today.
Key points
- RBA expected to keep the cash rate steady; guidance is the swing factor.
- OIS pricing implies at least one rate hike by 2026; about a one-in-three chance of a move by March.
- Decision at 14:30 Sydney (03:30 GMT; 22:30 New York), press conference one hour later.
- NAB Business Confidence (November) arrives three hours before the decision.
- A hawkish tone could lift AUD and front-end yields; a dovish tilt risks AUD softness.
- Thin year-end liquidity may amplify post-decision volatility across AUD, ASX, and rates.
Market context
Global stocks enter the session cautiously with risk appetite uneven and rates volatility subdued but fragile. In FX, attention remains on relative policy paths: if the RBA emphasizes sticky services inflation and wage dynamics, AUD could outperform peers tethered to central banks closer to cutting cycles. Conversely, any acknowledgment of easing domestic demand, or a softer inflation trajectory, may encourage a modest unwind of recent AUD support. As BPayNews notes, the reaction function will hinge on the balance of risks the RBA sketches for early 2026.
FAQ
When is the RBA decision and press conference?
The decision is due at 14:30 Sydney (03:30 GMT; 22:30 New York), with a press conference roughly one hour later.
Is a rate move expected today?
No change is widely anticipated. The focus is on the statement language and Governor Bullock’s remarks for clues on the timing and likelihood of any future hikes.
What is the market pricing for 2026 and March?
Derivatives pricing suggests at least one hike by 2026, with roughly a 33% chance assigned to a hike by the March meeting, subject to revision after today’s communications.
How could AUD/USD react?
A hawkish tone, highlighting persistent inflation or capacity constraints, would likely support AUD and lift front-end yields. A balanced or dovish-leaning message could see AUD slip and the curve bull-steepen.
Why does the NAB Business Confidence survey matter today?
It offers a timely read on demand, costs, and pricing power ahead of the RBA. A hotter pricing signal could add to hawkish risks; softer confidence would reinforce patience.
