The Reserve Bank of Australia looks set to ease policy again, and David Scutt, APAC Market Analyst at FOREX.com, unpacks the data driving that call.
“The Reserve Bank of Australia is widely expected to deliver its second rate cut of the cycle next Tuesday, with swaps pricing a 25 basis point move at around 98%.” Scutt notes that both markets and 42 of 43 economists surveyed see the cash rate ending 2025 nearer 3.35%, a shade above the Bank’s assumed neutral level. Yet the trimmed-mean measure—the Board’s preferred inflation gauge—still fails to return to the 2–3% midpoint on earlier projections.
Since February, rate-cut expectations have steepened, but that ironically raises the RBA’s inflation profile because its forecasts are conditioned on market pricing. “That increases the risk that the RBA could slightly lift its trim main inflation forecast beyond 2025”. Without a clear path back to target, Scutt argues, Governor Bullock is unlikely to promise more easing, opting instead for data dependence.
Soft first-quarter consumption and sluggish real wages may drag the Bank’s GDP forecasts modestly lower. Scutt highlights that unemployment “is hovering near 4.1%”, leaving labour-market projections broadly intact. A Brent price roughly $9 below the February assumption offers a “small dovish offset”, while sustained net migration keeps population growth, and potential demand, robust.
“If the cash rate is reduced, as we expect the RBA is unlikely to offer explicit forward guidance based off past behavior.” Instead, Scutt expects the post-meeting statement to zero in on household spending trends, labour-market resilience and global financial conditions. One hour later, Governor Bullock’s press conference could strike a slightly tougher tone, reflecting her history of leaning more hawkish than the collective Board view. Overall, Scutt believes the door remains open for additional easing should consumption stay weak and trimmed-mean inflation inch lower.
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---- Written by Gus Farrow
---- Expert: David Scutt, FOREX.com APAC Market Analyst
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