Markets widely expect the Reserve Bank of Australia to cut its cash rate on Tuesday
The statement from the Reserve Bank of Australia is due on July 8 at 2.30pm Sydney time:
- 0430 GMT
- 1230 US Eastern time
As you can see, while it’s a widely shared expectation, not all analysts are convinced.
Bank of America analysts argues that the RBA is likely to hold steady, pointing to underlying inflation pressures that remain uncomfortably high:
- specifically, the trimmed mean inflation gauge—a key measure closely watched by the central bank—is projected to exceed the 2.5% midpoint target in the upcoming quarterly data due at the end of July
- at the same time, the unemployment rate is expected to remain below the RBA’s 4.2% estimate, highlighting ongoing labour market tightness.
- adding to the concern, the analyst noted that unit labour costs remain elevated, driven by persistently weak productivity growth. This dynamic poses upside risks to inflation, even as headline price pressures ease.
Against this backdrop, the case for a rate cut becomes less clear-cut, with lingering inflation risks potentially giving the RBA reason to pause and reassess before loosening policy.
ps. I’m expecting a 25bp rate cut
This article was written by Eamonn Sheridan at www.forexlive.com.
