The Australian exchange rate foreign exchange RBA decision is coming! Institutions are divided into two camps: either raise interest rates by 25 basis points, or do not raise interest rates

At 12:30 on August 1, Beijing time, the Reserve Bank of Australia will announce the interest rate decision, and many investment banks have recently given their own forecasts. Including the Federal Bank of Australia and other institutions predict that the Reserve Bank of Australia will raise interest rates by 25 basis points this time, while JPMorgan Chase and other investment banks believe that the Reserve Bank of Australia will choose to maintain interest rates unchanged this week.

At 12:30 on August 1, Beijing time, the Reserve Bank of Australia will announce the interest rate decision, and many investment banks have given their own predictions recently. Many institutions predict that the Reserve Bank of Australia will raise interest rates by 25 basis points this week, but some institutions are expected to choose to maintain stability.The Federal Reserve Bank of Australia expects the Reserve Bank of Australia to raise its cash rate by 25 basis points in August to 4.35%. The Reserve Bank of Australia had noted in July that new staff forecasts and economic data would inform the August decision. Overall, the Commonwealth Bank expects Australia's labour market to remain strong, with lingering concerns about the outlook for inflation and wage growth, which will overshadow slightly weaker-than-expected June quarter inflation data and weak retail sales data. The Reserve Bank of Australia is expected to maintain its forecast for headline and potential inflation, which will not return to the upper end of its target range until mid-2025. In addition, the August rate hike is expected to be the last of the current rate hike cycle, with monetary policy easing beginning in the first half of 2024

Westpac had previously predicted that the Reserve Bank of Australia could raise interest rates by 25 basis points in both August and September, but now expects a 25 basis point rate hike in August, and the magnitude is "sufficient" to not raise interest rates in September.

Jarek Kowcza, senior economist at St George's, believes the Reserve Bank of Australia will raise official interest rates to 4.35 per cent - or 25 basis points from current levels. "We accept this will be another close call," he wrote.

Mark Cranfield, market strategist in Singapore, expects the RBA's quarterly forecast review to support its decision to raise interest rates for the last time in August by 25 basis points. Given the strength of the labour market, the RBA will be inclined to raise interest rates, although price growth is falling slightly faster than expected. Inflation in the country has a long way to go before it can sustainably return to the RBA's 2-3 per cent target range.

According to market research, 20 of 36 economists said the Reserve Bank of Australia will raise the cash rate to 4.35% at its August 1 meeting, while the rest said it would remain unchanged

However, there are also many institutions that believe that the Reserve Bank of Australia will choose to maintain interest rates unchanged in August.

Ben Jarman, chief economist at JPMorgan, said the Reserve Bank of Australia was likely to leave its official cash rate unchanged at its policy meeting on Tuesday, given recent signs of rapidly cooling inflation and evidence of subdued consumer demand.

However, he added that conflicting labour market and CPI signals made it difficult for the RBA to make a decision. JPMorgan now expects a further 25 basis point rate hike in November following the release of third-quarter CPI data. But given that inflation remains uncomfortably high, well above the upper end of the RBA's target range, the statement is likely to remain hawkish, Jarman said.

ANZ believes Australia's official cash rate will remain at its current level "for an extended period of time".

After Australia released second-quarter inflation data last week, the National Australia Bank adjusted its rate hike forecast for the Reserve Bank of Australia, which they do not expect to raise interest rates in August.

Analysts at National Australia Bank said service sector inflation remained stubbornly high in Australia, which in itself raised the risk that inflation would not return to the 3 per cent target within a reasonable timeframe. That did not even take into account the likely rise in prices for many other services in the September quarter. They said they would continue to monitor the latest data on the economy's response to rate rises so far.

In addition, the Reserve Bank of Australia's shadow committee, composed of macroeconomists from the Australian National University, was slightly inclined to suspend interest rate hikes on Tuesday.

Australian dollar/US dollar daily chart

At 9:57 on August 1, Beijing time, the Australian dollar was trading at 0.6703/0 against the US dollar.