Cuts still coming but the timeline stretched
The RBA decided to hold rates today and emphasized the jobs market as a key cog in what comes next. The election in two weeks time was undoubtedly a concern below the surface as well.
A cut is still on the table but it will more weak economic data, or an escalation in the US-China trade war, will tilt the balance.
For now, the market has shifted to a much more cautious stance. The implied odds in the OIS market for the June meeting are 18%, down from 62% at the start of the week. Looking ahead, the odds are at 48% in July, 68% in August and 84% at year end.
