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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, Commodities

Market pricing of cash rate cuts by the Reserve Bank of Australia (RBA) has extended over the past week (refer to chart below). A further 25 cumulative basis points of cuts are currently priced by the May Reserve Bank Board meeting, and then a further 20 basis points beyond that by the end of the year.

It would be very unusual for the Reserve Bank not to follow up the February rate cut with another one in March. If history is any indication, another rate cut in March should be expected and yet the market is still only assigning a 50% probability.

Past cycles highlight that the RBA usually follows up easings quickly (refer to chart below)

Source: Rural Bank

 

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