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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

The minutes from the RBA’s May meeting revealed that the last rate cut was a close call, which has seen the market start to price out one of the two expected follow-up rate cuts. Conversely, the minutes of the US Federal Reserve meeting suggested that a rate increase may come as early as their next meeting on 16 June. The odds on the US Fed delivering a rate hike in June have increased to 30% – it was just 4% a week ago.

For us though, another 25 basis point rate cut is still on the cards, but not until August and will be dependent on the next CPI data release.

Futures Pricing of the Cash Rate

The expectation that the RBA will continue to ease monetary policy should keep rates low for the remainder of this year, but with the US Fed expected to continue policy normalisation and raise US interest rates, there will eventually be upward pressure on our rates – but not until mid-next year.

Source: Rural Bank


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