Greg Jericho
Chief Economist

Ahead of today’s decision, the market is pricing in a 100% chance of a 25 basis point cut from 4.1% to 3.85% and a 50% chance of a 50 basis point cut to 2.65%. Because of my love of easy numbers to remember I would actually appreciate the RBA cutting the rate by 35 basis points to 2.75% so that we can get back to the old .25%, .50%, .75% rate figures (this would also make life easier for politicians getting gotcha questions from journalists!)

Essentially the market expectations for rates cuts are where they were after the last meeting at the beginning of April. In between then and now we have had Donald Trump’s tariff insanity which had economists and investors worrying about a global recession and the need to cut rate even more drastically – for a while, some investors were betting there would need to be 4 rates cuts by the end of the year and maybe 5 by this time next year. Those fears have subsided for now, but the market still anticipates 3 rate cuts by December.