Thanks to RBA Governor Lowe’s comments last week, we are now a lot closer to not “if” but “when” would the RBA cut rates. In his speech last week, the RBA governor confirmed that the RBA will consider the case for a rate cut at their next board meeting. In his speech, Lowe was up-front saying: “a lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target” and “at our meeting in two weeks’ time, we will consider the case for lower interest rates.” This is the most direct comment ever from the RBA Governor and the clearest signal yet that rates would be cut as early as June. It doesn’t guarantee that the RBA will deliver a rate cut, but it is as good as we are ever likely to get.
Financial markets are now convinced a 4th June rate cut is imminent (at a 98% probability) with a possible second RBA rate cut in August to help stabilise employment growth and increase the likelihood that CPI will rise back to the RBA’s target range.