The RBA has now cut the cash rate in June and July to a record low of 1.0%. We also have personal income tax cuts that were passed through Parliament last week which will take effect immediately. This means that single income earners will collect up to $1,080 in tax relief while dual-income families could get up to $2,160 once they have lodged their tax return for 2018/19. Those earning between $48,000 and $90,000 receive the full $1,080 offset, with the tax cut tapering off for taxable incomes of $90,000 to $126,000. These tax cuts are estimated to be the equivalent of around two RBA rate cuts provided this money is spent rather than saved.
While financial markets are still pricing a small chance of another RBA rate cut for August (20% probability) and a November rate cut at just over 60%, with stimulus to come from the tax cuts added, some are now saying the RBA is finished with monetary policy. Nonetheless, futures markets still have the terminal cash rate at 0.65% by May next year.