RBA preview: Probability of rate cut is very low, according to OIS

The overnight index swaps (OIS) are reportedly pricing just 8 percent change of an RBA rate cut on Tuesday.  

The central bank is expected to keep rates unchanged at 0.75% and reiterate that the Australian economy is at a “gentle turning point”. 

The recent data, however, has been anything but positive. The manufacturing activity contracted in the month of November, job ads fell further, inflationary pressures eased and building approvals fell much more than expected, signaling a deeper deterioration in the economic activity, according to Kathy Lien, Managing Director BK Asset Management. 

While the RBA is seen maintaining the status quo for the rest of the year, it is expected to cut rates to 0.5% in February 2020.