As was expected by the majority of economists (but not by financial market pricing), the RBA left the cash rate unchanged after their monthly Board meeting last week. The market had priced in a 70% probability of a rate cut after the CPI data release so, following the RBA announcement of no move, rates immediately rose. The market also promptly reduced the expectations of a rate cut in December as RBA commentary on the state of the economy was more up-beat than anticipated.
Interbank-futures now imply a terminal cash-rate of 1.66% in August next year, well above the low-point of 1.52% priced in a week earlier (refer chart below).
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