Australia’s central bank is likely to lower interest rates by 25 basis points to 3.60% in August, following an unexpected decision this week to leave rates unchanged, a Reuters poll of economists shows.
The Reserve Bank of Australia held the cash rate steady for the second time this year, surprising markets as policymakers wait for clear evidence that inflation is moving sustainably toward the 2.5% midpoint of their target range.
Craig Vardy, head of fixed income for Australasia at BlackRock, who correctly predicted the hold, said markets had overestimated how quickly the RBA would cut. “They remain on a path to lower rates but will proceed cautiously,” he noted.
The RBA has already cut rates twice in 2025 - in February and May - while pausing in April and July.
With second-quarter inflation data expected later this month, all 30 economists surveyed anticipate a rate cut on August 12. Most also expect rates to fall further to 3.35% or even 3.10% by the end of 2025, although the pace of easing may be slower than previously forecast.
AMP economist My Bui said rates remain restrictive and will ultimately have to come down further, but “the RBA will likely move more gradually than we thought earlier.”