A 25 bps rate cut for tomorrow is fully priced in now with markets even pricing up to ~63 bps of rate cuts by year-end. The question now is, how much can the RBA realistically deliver in the months ahead?
If you're thinking the RBA will tee up another rate cut by December or even provide hints for one in September or November, I reckon you'd be disappointed. As things stand, the key for policymakers is to hope that inflation developments stay the course while observing further deterioration in labour market conditions.
The cash rate now stands at 3.85% and is likely to be reduced to 3.60% tomorrow. Analysts are estimating the neutral rate somewhere closer to 3%. The RBA hasn't been explicit about agreeing to that but at this stage, you can definitely say that they are still feeling their way to neutral territory.
Given the market pricing, I reckon there's limited scope for downside to the Australian dollar. That unless the RBA surprises and leans more on the dovish side, which I would argue would not be prudent at the moment.
With the RBA perhaps only having enough room to deliver one more rate cut after August, there is upside potential for the aussie depending on the data. And we won't have to wait long to get a sense of that, with the next Australian labour market report coming up later this Thursday on 14 August. And the next one after that will be on 18 September, before we get to the 30 September policy decision.
This article was written by Justin Low at investinglive.com.Hence then, the article about rba poised to cut cash rate tomorrow after july pause was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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