“The economy is not performing exceptionally well, but we’re not seeing the significant deterioration that would warrant immediate rate cuts.”
That’s the view of Ray White’s chief economist Nerida Conisbee.
She said unemployment has remained relatively low and consumer spend had maintained modest growth, indicating the economy had shown “unexpected resilience”.
The RBA said it was leaving wriggle room to deal with the impacts of global uncertainty, namely Donald Trump’s incoming tariffs.
However, Conisbee pointed out another sign that the rate cutting cycle may not have as a significant impact as earlier anticipated.
The markets, which had previously priced in up to four rate cuts for 2025, have now moderated their expectations to just two potential cuts later this year.
So what do the big banks think? There could be some changes over the next few days but this is the current state of play:
CBA, Westpac and NAB expect there will be three more cuts this year, with the next one happening in May.
CBA and Westpac think the cutting cycle will finish at the end of the year.
NAB is expecting one more cut in the first quarter of next year, taking the cash rate down to 3.10 per cent.
ANZ is expecting just one more cut in August, which would take the cash rate to 3.85 per cent.