Invest
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
Invest
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary policy.
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary policy.
State Street executives said the decision reflected optimism about inflation progress, though global uncertainties and labour market strength provided some offsetting concerns.
Dwyfor Evans, head of APAC macro strategy at State Street Markets, said the central bank's projections indicated a roadmap towards easing policy settings.
"The RBA eased the cash rate by 25bps, as widely expected," he said.
"Optimism on inflation was offset to some extent by uncertainty around the tariffs and the still strong jobs market, but projections on prices and rates alludes to a roadmap towards less restrictive policy."
Evans noted the decision provided clearer guidance than recent RBA communications.
"Some talk of a 'hawkish cut' before the decision, but global uncertainty aside, this was a clearer directional message from the RBA than we have seen for some time," he said.
Krishna Bhimavarapu, APAC economist at State Street Global Advisors, welcomed the rate reduction while highlighting potential economic headwinds ahead.
"Glad to see the RBA deliver on the widely expected 25 bps cut today," he said.
"Looking ahead, GDP growth in Q1 could tread water, as indicated by leading indicators."
Bhimavarapu suggested weaker growth could accelerate the pace of rate cuts.
"If growth surprises to the downside, we see higher chance for the cash rate reaching our forecast 3.10 per cent by December," he said.
The economist also flagged evolving global trade dynamics as a key consideration for future policy decisions.
"Global trade dynamics are looking to be reset with fast paced discussions between many countries," he said.
State Street manages $4.7 trillion in assets under management and provides custody and administration services for $46.8 trillion in assets globally.
The rate cut comes amid signs of moderating inflation pressures and concerns about economic growth momentum in Australia.
Financial markets had widely anticipated the 25 basis point reduction ahead of the RBA's decision.
The central bank's move reflects a shift from its previous cautious stance as policymakers balance inflation control with supporting economic growth.
State Street's forecast suggests further rate reductions could follow if economic conditions weaken more than expected.
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