19 Feb The RBA starts cutting rates – implications for the economy and investors
Key Points
- As widely expected, the RBA cut its cash rate to 4.1% from 4.35% after 13 rate hikes reflecting “more confidence that inflation is moving sustainably towards” the 2-3% target.
- However, the RBA noted that it is “cautious on prospects for further policy easing”.
- We expect the RBA to cut again in May and August taking the cash rate to 3.6% this year with another cut next year.
- The start of a gradual easing cycle should help provide support for the shares and home prices, albeit some of the good news on rates has already been factored in.