Summary:
The Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to 3.60% on 12 August, marking its third reduction this year. Following the cut, the interbank overnight rate aligned at approximately 3.59%, reflecting strong adherence to the new target. The adjustment prompted a broad-based decline in short- and long-term yields across the curve, reinforcing expectations of continued accommodative central policy. Investors’ focus remains firmly on upcoming inflation and employment data, which will influence the RBA’s next policy moves.
The RBA has signaled that further rate cuts could occur if economic conditions warrant, while inflation is expected to stay within the central bank’s 2–3% target range. Global uncertainties, including trade tensions and slowing GDP growth in major economies, also continue to influence investor sentiment.
Figure 1: Swaps on RBA Rate Cuts
| Cash Rate expectation Data table | |||||
|---|---|---|---|---|---|
| Date | 22-Aug | 15-Aug | 8-Aug | 1-Aug | 25-Jul |
| Jul 25 | 3.84 | 3.84 | |||
| Aug 25 | 3.69 | 3.69 | 3.69 | 3.69 | 3.69 |
| Sep 25 | 3.59 | 3.59 | 3.59 | 3.59 | 3.59 |
| Oct 25 | 3.52 | 3.51 | 3.50 | 3.50 | 3.50 |
| Nov 25 | 3.34 | 3.33 | 3.34 | 3.34 | 3.35 |
| Dec 25 | 3.25 | 3.25 | 3.24 | 3.00 | 3.28 |
| Jan 26 | 3.23 | 3.22 | 3.21 | 3.25 | 3.25 |
| Feb 26 | 3.12 | 3.12 | 3.09 | 3.12 | 3.14 |
| Mar 26 | 3.09 | 3.10 | 3.08 | 3.10 | 3.13 |
| Apr 26 | 3.07 | 3.09 | 3.07 | 3.09 | 3.12 |
| May 26 | 3.03 | 3.05 | 3.34 | 3.06 | 3.10 |
| Jun 26 | 3.01 | 3.04 | 3.03 | 3.06 | 3.10 |
| Jul 26 | 3.01 | 3.04 | 3.02 | 3.05 | 3.09 |
| Aug 26 | 3.01 | 3.03 | 3.02 | 3.05 | 3.09 |
| Sep 26 | 3.01 | 3.03 | 3.02 | 3.05 | |