Reserve Bank of Australia Governor Bullock is addressing parliament, delivering a prepared speech and answering questions. The RBA aims to continue reducing its cash rate, albeit gradually, with no cuts anticipated at the upcoming meeting later this month.
In China, the People’s Bank of China is set to announce its Loan Prime Rate decision. Current expectations are for the interest rates to hold steady at 3.0% for the one-year term and 3.5% for the five-year term.
Economic Calendar Insights
The primary policy rate for the People’s Bank of China is its Open Market Operations repo rate, which stands at 1.4%. These updates are part of the economic calendar in Asia as of 22 September 2025.
With Reserve Bank of Australia Governor Bullock speaking, we will be watching for confirmation of a slow, data-dependent rate-cutting cycle. We have seen the cash rate come down from its 2024 peak to the current 3.10% as inflation has finally eased to 3.2%, which is still above the target band. Given no cut is expected this month, the RBA is signaling it is in no hurry, especially as the unemployment rate has only ticked up to 4.5% in the latest data release.
This slow pace from the RBA suggests that implied volatility on the Australian dollar may be overpriced in the near term. We believe selling out-of-the-money options on the AUD/USD could be a prudent strategy, aiming to collect premium as the currency trades in a predictable range. This approach proved effective during similar periods of well-telegraphed RBA policy in early 2024, when currency fluctuations were muted for months.
Regional Monetary Policies
The People’s Bank of China decision also reinforces this view of regional stability, as holding rates steady is the widely held expectation. China’s Q2 2025 GDP growth of 4.8% showed a fragile recovery, and authorities seem focused on targeted support rather than broad monetary easing that could weaken the yuan. This policy stance in China likely caps the upside for Australian commodities, and therefore the Australian dollar.
This environment supports a strategy of using interest rate futures to position for a very gradual decline in the Australian cash rate over the next six months. Traders might consider calendar spreads in ASX 30 Day Interbank Cash Rate Futures, betting that the market is too aggressive in pricing in cuts for the near term but about right for mid-2026. This view is based on the RBA’s historical preference, seen throughout the 2023-2025 period, to move cautiously outside of crisis situations.
