The US Federal Reserve meeting and weakness in China’s growth profile are both front-of-mind for the market at the moment. The US Fed is on the verge of raising rates for the first time since 2006 and will make a decision at their September meeting this week, while markets remain nervous over growth concerns and equity market turmoil in China. Current market pricing is only giving a 30% probability to the US rate hike occurring this week.
Domestically, and after the release of a weaker than expected GDP figure just over a week ago, the market is now pricing one full cut by February 2016 and 33 basis points of easing by July 2016.
Futures (forward) Market Pricing of the Cash Rate