For rates traders, the note argues against reading too much into tone shifts between the press conference and market-focused speeches, and in favour of the minutes and officials’ data interpretations as the cleaner signal. The Governor describing the labour market as a little tight, plus staff’s downbeat view of supply capacity, leans hawkish and supports pricing for further tightening rather than a pause. The coming fortnight is dense with event risk for the Australian dollar and front-end yields: the quarterly CPI lands alongside Senate Estimates testimony, followed by the November decision, the Statement on Monetary Policy and further speeches. With supply shocks driving inflation, including energy, a firm CPI would reinforce the hawkish read.
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Yesterday:
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The RBA has never been chattier, but Westpac’s Luci Ellis says traders hunting for promises should listen instead to how it reads the data, because that is where the real signal lives.
Summary:
- Westpac Group chief economist Luci Ellis counts 58 RBA public engagements so far this year, matching all of last year and above 52 in 2024
- Delivery has shifted from set-piece speeches toward fireside chats and broad media interviews, aimed partly at the general public
- Press conferences target the public, so tone can sound softer than in market-facing forums; Ellis says the minutes better reflect the Board’s view
- Speeches are more technical, focusing on neutral rates and financial conditions, and a spot check suggests they are harder to read than in 2021
- The RBA still gives no forward guidance; its interpretation of data, such as the Governor calling the labour market a little tight, is the key signal
- The run-up to November includes Senate Estimates alongside the quarterly CPI, then the decision, Statement on Monetary Policy and further speeches
The Reserve Bank of Australia is talking more often, in more places and on more technical subjects than it did a few years ago, but it still is not promising anything about the path of interest rates, according to Westpac Group chief economist Luci Ellis. In a note on RBA communication, she argues that the clearest signal of future policy lies in how officials interpret incoming data, rather than in any form of forward guidance.
Ellis counts 58 public engagements on the RBA’s speeches page so far this year, already matching the total for all of last year and above the 52 recorded in 2024. Delivery has shifted too, away from set-piece policy speeches toward semi-scripted fireside chats and interviews across a wide range of media, part of a broader effort to explain decisions to the general public at a time when rates are rising but households are not the main source of inflation.
That wider reach can confuse markets, Ellis says, because different audiences call for different tones. The post-meeting press conference is aimed at the public, so a Governor who sounds softer there may simply be acknowledging that policy is causing pain, much as a doctor warns that a treatment might hurt without stopping it. Where tone differs, she argues, pre-drafted material such as the minutes is a more reliable guide to the Board’s thinking than off-the-cuff answers.
The content has also become more technical. Officials increasingly discuss estimates of unobservable variables such as neutral interest rates and financial conditions, and a spot check of readability scores suggests recent speeches are harder to read than those from 2021. The RBA has also stressed that monetary policy works through several channels beyond mortgage repayments, though Ellis notes that if the cashflow channel is the smallest, as the Deputy Governor suggested, a small group of households is bearing a heavy cost for limited effect on inflation.
The practical takeaway is to read the RBA’s interpretation of data. Ellis highlights that the Governor described the labour market as a little tight after the September meeting, even though the Board’s statement did not, and says the Deputy Governor’s recent hawkish tone was no surprise given staff’s downbeat view of supply capacity. With Senate Estimates coinciding with the quarterly CPI release ahead of the November decision, there will be plenty for markets to parse.
Ellis when she was with the Reserve Bank of Australia.
This article was written by Eamonn Sheridan at investinglive.com.