ANZ and TD Securities are the latest to jump on the bandwagon
Both firms now see the RBA cutting rates by 25 bps in May but are not of the view that the Australian central bank will deliver two consecutive rate cuts. Instead, both firms view that the RBA will next cut rates again in its August meeting.
TD notes that the RBA won't be in a hurry to deliver consecutive rate cuts because (1) the collapse in BBSW removes any impediment for retail banks to pass on the rate cut in full and (2) the RBA can wait and see how accommodative fiscal policy will be once a new government is formed after the May election.
In terms of cash rate futures pricing, the market is seeing a 71.0% probability of the RBA cutting rates in May and already has fully priced in two rate cuts by the December meeting (as shown above). For some semblance of how dramatic the pricing has shifted, yesterday the probability for a cut in May was only 14.2% and traders only saw a 36 bps rate cut priced in by December this year.
