RBA to cut again by 25bp in August - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the RBA cut the cash rate for the first time in 12 months in May, to 1.75%.

Key Quotes

“The move was about 50% priced in following Australia’s stunningly low Q1 CPI data.

The decision was clearly explained as following “information showing inflationary pressures are lower than expected.” The RBA’s May SoMP retained a bullish growth outlook but surprised by projecting core inflation of just 1.5% in 2016 and 2.0% in 2017/18.

This reinforces Westpac’s view that the cash rate will be cut again. Our base case is another 25bp easing in August. Markets will understandably price in a risk of a cash rate below 1.50%.”