RBA likely to maintain cash rate at 2.25% in a close call

The Reserve Bank of Australia (RBA) is expected to keep the policy cash rate on hold at 2.25% at the Monetary Policy Committee (MPC) meeting on 7 April. The central bank kept rates unchanged in March, surprising markets.

"The April policy decision will likely be a closer call than the one in March. We expect the RBA to lower the cash rate another 25bps to 2.00% to further support demand, but believe the cut is more likely in May than April, when more data, particularly on Q1 inflation, will be available", said Standard Chartered in a note on Thursday.
  
The RBA's March meeting minutes indicate that the board believes the economy needs more time to adjust to the February rate cut. However, money markets are pricing in a 75% chance of a 25bps cut in April. Retail sales are likely increased 0.3% m/m in February on increased tourist arrivals.