Commentary by the firm’s chief economist, Bill Evans
- A pause between cuts might have allowed for a smoother transmission process
- But cannot deny the explicit signals provided by Lowe’s more recent speech
- Early days for interpreting Lowe’s language at a time when policy is active
- Based on previous experience with other central bankers, the language is direct
- As such, we now expect a cut in July that will substitute for the move originally expected in August
The RBA will meet again next Tuesday and currently, the cash rate futures indicate that there is a ~84% probability of the central bank cutting rates by another 25 bps at its upcoming meeting. I reckon that’s a real possibility after Lowe’s remarks last week here which gave rather firm signals of such a move.
They’re already behind the curve when it comes to acting on this matter so consecutive cuts is certainly not out of the picture.