ANZ’s head of Australian economics, Adam Boyton, has announced that his team now anticipates the Reserve Bank of Australia (RBA) will cut the cash rate by 25 basis points at its upcoming board meeting next week. This revision comes as economists reassess key economic indicators and global uncertainties.
Boyton highlighted several factors influencing the revised forecast, including a concerning six-month trend of weak retail sales and a stalled recovery in consumer confidence. Ongoing uncertainty surrounding US trade policy also contributed to the decision. These elements combine to create an environment where preemptive action is deemed necessary.
According to ANZ’s report, a 25-basis-point reduction in July represents the most prudent course of action, especially compared to waiting until the August meeting for a full forecast update. This approach aligns with the RBA’s previous strategies, such as the prior two rate cuts and the tightening in November 2023. ANZ is one of Australia’s largest banks, providing a range of financial services to individuals and businesses.
Despite the expectation of a rate cut, Boyton noted that the decision remains finely balanced. The meeting is expected to be a much closer call than current market pricing indicates, suggesting that the RBA’s final decision will depend on careful consideration of all available data and potential impacts.
