The RBA simply couldn't ignore its inflation mandate any more
Considering inflation data and the outlook, the RBA should've moved last month to cut rates as mentioned here at the time. They didn't and I chalked that up to being a political move and the decision this month certainly vindicates that assessment.
They did cut the cash rate today as expected but it's really been one month in the making already and now they're going back to their data dependent rhetoric yet again. The key takeaway from their decision here is that they didn't give any firm commitment to future rate cuts but they're not taking such a possibility off the table either.
So, what's next?
The RBA can only go against the current for so long. Domestic and global economic headwinds continue to persist and with inflation not seen recovering in a robust manner towards their 2% to 3% target band, more rate cuts down the road look more likely.
I thought the RBA would've given more for traders to digest but really, there isn't anything in the statement worth noting as this is exactly the same kind of stuff we've been talking about since April and May.
As such, keep a continued focus on further data in the coming weeks/months. Of note, we'll get the GDP report tomorrow and labour market report next week. Those will be key points to focus on but I reckon as more and more data creeps in, it'll only serve to justify that further rate cuts are needed later this year.
