The market seems certain that we will see more rate cuts from the RBA this year, but after a 50bps cut last time, there is a lot of uncertainty surrounding tomorrow’s meeting. A more dovish statement might be all we get this time around or the RBA might decide that a bit more stimulus is needed. Inflation is currently a non-issue and a bigger worry for the RBA might be whether the big banks will pass on the rate cut or not. House prices are falling and the non-mining part of the economy is definitely struggling, strong reasons for another 25bps cut. On the other hand, the RBA is usually very cautious and they may prefer to wait for further information regarding the effect of the 50bps cut, before they act again.
