Unknown Unknowns
26.6% of people answered this correctly. And I like to think that the responders to the below poll are more clued in than the average Australian.
Shocking isn't it? Less than 1/4 realise that the April 2023 implied cash rate is >3%.
Source
I know the curve says one thing, but is it realistic to assume the cash rate in Australia will be 3% in 12 months time? If not, and realised rates end up lower than implied, what affect does the curve flattening have on the market?
April 2013 was the last time the cash rate was at the implied level, 10 years between drinks.
Bonds actually look pretty good from risk/reward perspective for the first time in a while.
Catching a wild horse
The RBA has lost the initiative, trapped now to say the least and policy is being determined by the market. Rates & cost of funding everywhere is already higher and the RBA hasn't had a chance to open its mouth yet.
Maybe that is okay in their view, to let the market do its thing and intervention is not required. And maybe the cash rate ends up at 3% in a nice & orderly fashion (haha).
Do they raise rates today? Do they not? Who cares when the curve is control!
(The cynic in me thinks Guy Debelle left bang on time)