Commentary by the firm's chief economist, Bill Evans

RBA
  • 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.