FEAR & GREED | Business News Q+A: How many more rates cuts will we get?
Aug 12, 2025
Belinda Allen, a Senior Economist at Commonwealth Bank, dives deep into Australia's interest rate landscape. She discusses the recent cuts by the RBA and what they mean for future economic recovery, forecasting more cuts on the horizon. The conversation highlights the differences between Australia's and the US's central bank strategies. Belinda also sheds light on the labor market and upcoming economic data that could shape rate decisions. Lastly, she explores the impact of these rate cuts on the housing market, hinting at a potential rise in home prices.
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Productivity Slowed The Surprise
- The RBA's August cash rate cut was widely expected while the forecast downgrade on productivity surprised markets.
- Lower productivity forecasts imply softer potential growth for Australia over coming years and change the macro backdrop for policy.
July Hold Looked Like Timing, Not Error
- The RBA's pause in July fit the data path observed over the following five weeks rather than being a clear mistake.
- Data since then have reinforced the view that inflation is evolving as the RBA expected, supporting further easing.
Watch Labour Data For The Next Cut
- Expect one more cash rate cut in November as Commonwealth Bank's base case, with a risk of further easing in 2026.
- Watch labour market data closely, since a rising unemployment rate could bring an earlier September cut.