What You Need to Know About the RBA Meeting
Any keen investor knows that an awareness of the most important news releases dates on the economic calendar are vital to making key trading decisions. When a major data release or financial news report is scheduled to be released, there will inevitably be increased volatility in the markets and so knowing which days these announcements are going to be made is an important part of planning for and placing effective trades. Although there will always be some investors who would prefer to steer clear of the market around these dates so that they can avoid taking undue risks with their money, there are plenty of others who value this knowledge so that they can find out more about the outcome that is being predicted and place an informed trade in the hope of taking advantage of this volatile time in order to enjoy a larger profit. One key date in the economic calendar is that of the RBA meeting and being prepared in advance for this event will help serious traders to make a decision about their trading options.
What is the RBA?
The RBA is the Reserve Bank of Australia and is the central bank of the country. Its powers and functions are derived from the 1959 Reserve Bank Act and the primary duty of the body is to improve the currency’s stability while striving for full employment and taking care of the welfare and economic prosperity of all of the people living in Australia. To this end, the RBA sets the cash rate in order to meet the agreed inflation medium term target and works to maintain the strength and efficiency of the country’s financial and payments systems while also issuing the country’s bank notes. The RBA also provides specific banking services to the government of Australia and its agencies as required as well as to several other overseas official institutions and central banks. Another part of its function is to manage the country’s foreign exchange and gold reserves. The RBA is divided into a number of boards with the Reserve Bank Board being the body that is responsible for the RBA’s banking and monetary policies on all matters except the payments system and meet regularly in order to discuss interest rates and other financial policies affecting the country.
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Who is on the RBA Banking Board?
There are 9 members on the Reserve Bank Board of the RBA. This includes 3 ex-officio members: The Governor and Chair, the Deputy Governor also acting as Deputy Chair and Treasury Secretary. There are also 6 non-executive members who will have been appointed by the Treasurer. Both the Deputy Governor and Governor stay in office for a period of up to 7 years and after that time they can then be reappointed. All non-executive members serve a term of up to 5 years with no limit being set on how many terms may be served by any one member. No member of the Reserve Bank Board can be an employee, officer or director of a deposit-taking institution.
Current members of the RBA Reserve Banking Board include:
How Frequently are RBA Meetings Held?
There are 11 scheduled meetings of the RBA Banking Board every year and these meetings are held on the first Tuesday of each month with the exception of January, with the majority of these taking place in the RBA headquarters in Sydney. Every second year at a minimum there is also a meeting held in Melbourne and every year there will be a meeting held in a different city in Australia. Meetings generally begin at 9 AM and last for about 3 and a half hours. A quorum of 5 members attend the meeting which is chaired by either the Governor or the Deputy Governor should he be absent. Decisions are reached through a majority vote and the casting vote is held by the Chair should it be necessary. Monetary policy minute meetings are always published a fortnight after the meeting.
When is the Next RBA Meeting Due to be Held?
Being aware of the next RBA meeting date is key information for all serious investors. This table shows all of the upcoming dates when the RBA Reserve Banking Board are schedule to meet in 2016.
RBA Meeting Dates for 2016
Why is the RBA Meeting of Importance to Investors?
Most investors use their analytical skills such as fundamental analysis to place successful trades in the financial market. One key part of this is economic indicators like the financial calendar. RBA meetings are exceptionally important to investors, and especially those who like to trade the foreign exchange market, as the decisions made at these occasions relate to interest rates and monetary policies in Australia which affect movements in the Australian Dollar. This in turn will have an impact upon all currency pairings and around the time of these meetings there is certain to be a great amount of volatility until the outcome of any decisions are known. Having adequate preparation for this time of rapid asset price movements is essential for any trader who wants to limit their risk or alternatively to try to capitalise on their investment.
Strategies for Trading Economic News Such as the RBA Meeting
Investors are aware that the financial markets are prone to short term rapid movements when an piece of key economic news is scheduled to be released. This is especially true in the foreign currency exchange market when the news involves the interest rates and foreign currency reserves of a country, such as in the case of the RBA meeting. These important meetings have a significant impact on currency pairs around the globe and therefore anybody who wants to enjoy successful trading in the Forex market should be aware of the dates on which this type of data will be released so that they can plan their strategy in advance for the fast moving market around this time.
If a trader does not want to limit their risk by staying away from trading at this time, it is likely that they will be looking out for a period of consolidation before a large number when they trade these types of economic news releases. They will then usually trade that breakout on either a short term or daily basis. There is a danger when doing this however that the investor could be putting themselves at risk of a reversal due to the volatility in the market. Trading reversals is one of the most dangerous strategies that can be adopted, even when the market is in normal conditions, however at this volatile time it is even more risky. If you are interested in trying this strategy, you will need strong risk management and money management skills in order to succeed. When trading reversals, an investor should enter into the release having identified the levels of resistance and support. They should then wait for the news announcement to be released. Immediately following this announcement, the investor should keep a close eye on the prices in order to see if those long term levels of support and resistance are going to come into play. Should this happen, the investor needs to watch in order to gain an idea as to whether those levels will hold or not. Price action is important here. A trader should see support entering into the market at those long term levels before they trigger a long position and place a stop below the level of support. It is essential to fit in tightly so should the reversal fail to play out, they can take their position out rapidly. However should the support level hold, the investor is able to scale out as soon as the position begins to move in their favour so that they can capture as large an upside as they can. While this is a risky strategy, it can pay off for an investor who is willing to take risks and who has very strong skills with money and risk management, and large profits can be made.