RBA: 25bps cut, another to come - ANZ

David Plank, head of Australian economics at ANZ, points out that in line with market pricing and the expectations of every analyst surveyed by Bloomberg, bar two, the RBA cut the cash rate by 25bp following its June Board meeting.

Key Quotes

“It will be interesting whether the RBA provides any additional clarity on how it will judge progress in the labour market.  The Governor’s speech tonight, the title of which has been revealed as Today’s Reduction in the Cash Rate, may give us this clarity. As things stand the market could be excused from assuming that even a sideways move in the unemployment rate, let alone a bump higher, will deliver a rate cut at the next RBA meeting.”

“We doubt this what this RBA is signalling. While we think there will be a further easing in coming months, our view is that the RBA will display some patience, given it doesn’t have a lot of policy space. If some of the key forward indicators display notable improvement then the RBA may sit pat for a period even if the unemployment holds around current levels. If they don’t, it will go sooner.”