Analyst dashes possibility of RBA cut beyond 25bp
Alongside the majority of industry analysts and economists expressing their agreeance that the Reserve Bank of Australia (RBA) is most likely to cut the official cash rate by 25 basis points, one analyst has gone further in suggesting a 50-basis-point cut would be most unlikely.
Ahead of the central bank’s next monetary policy decision to be handed down this afternoon, Carl Ang, Fixed Income Research Analyst at MFS Investment Management, said the RBA’s latest announcements have suggested it would be taking a “cautious and predictable approach to policy normalisation”.
Ang said this sentiment indicates a 50bp reduction would remain a “remote possibility” at the upcoming meeting.
“We expect the Reserve Bank of Australia (RBA) to deliver a dovish insurance cut of 25 basis points this week,” Ang said.
“Given the ever-shifting shifting balance of risks and the heightened uncertainty it creates for hiring and investment in the Australian economy, more RBA cuts are set to follow.”
Ang also confirmed MFS Investment Management’s forecast for where the central bank would end its policy easing sits at 3.1 per cent.
“As such, a 3.1% terminal rate by early 2026 remains the base case for this RBA cutting cycle.”
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