Rate Cuts on the Horizon

The Reserve Bank of Australia (RBA) is facing immense pressure to cut interest rates, especially after a long period of increases aimed at combating high inflation. Expectations have risen significantly, with market sentiment indicating a nearly 95% likelihood of a rate cut. Chief Economist Greg Jericho highlights that with recent favorable inflation figures, such as a Consumer Price Index (CPI) drop to 2.4%, the RBA has run out of justifiable reasons to maintain the current rates. As other central banks globally begin to lower rates, the RBA is seen to be lagging, creating a sense of urgency for a monetary policy shift.