An argument that the RBA may indeed cut rates today

Glenn Stevens was quite clear a few weeks ago when he said that interest rates were about right, and most of the other comments from RBA board members would seem to support the view that the RBA will only cut rates if/when the economy needs some stimulation. I was of the view after the last meeting, that the RBA didn’t cut because of their sense that the big 4 Australian banks wouldn’t pass the cut on to their customers, thereby rendering any policy shift more-or-less useless. But we should not forget that the big banks have increased their rates independent of the reserve bank since the last meeting, which amounts in essence to a mild policy tightening. Perhaps the RBA will consider cutting official rates by less that 25bps or even less, to make up for the change in the private banking world? As I said earlier, the market is factoring in a 20% chance of a rate cut which means there is still a small chance. (As you probably know, and for good order sake, I’m short AUD against the USD, GBP and the JPY).