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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

The March quarter CPI data last week surprised the market on the lower side of estimates and has resulted in a large shift in expectations for an RBA rate cut as early as May (from under 10% pre-CPI to around 65% currently) which has seen a sizeable rally in short term yields, a fall in the Australian dollar and our share market close the week at a record high.

While inflation was not on the RBA’s radar as a trigger to move monetary policy, this lower than expected result makes the RBA’s task to restore inflation to the 2% to 3% range even more difficult – hence the change in market expectations. Markets are pricing around 50 basis points of cuts by early next year – including a 50% probability the RBA cuts in early May.

Futures Market Pricing Cash Rate

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Source: Rural Bank


Disclaimer: Whilst all care has been taken in compiling the information, the information should not be relied upon as substitute for professional advice where necessary. Rural Bank accepts no responsibility for the accuracy, completeness or timeliness of the information and disclaims all liability in relation to any loss or damage suffered by the use of or reliance upon any information contained herein or in any attachment or annexure hereto by any person. Rural Bank – A Division of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL 237879