RBA: One further 25bp easing in August - Westpac

Sean Callow, Research Analyst at Westpac, notes that the RBA cut the cash rate for the first time in 12 months in May, to 1.75% following very low Q1 inflation.

Key Quotes

“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.

At the July meeting, the RBA said it would monitor upcoming data on inflation, indicating that August is very much “live”.

Westpac’s base case remains one further 25bp easing in August, though an upside surprise on inflation would cast some doubt on this timing. Interest rate futures imply a 2/3 chance of a rate cut in August.”