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MNI: Markets Overplaying End-of-Year RBA Cut - Ex-Economists

Former RBA economists discuss the cash rate outlook.

MNI (MELBOURNE) - Financial markets have mispriced the chance of a 25 basis point rate cut by the end of the year, with price and unit labour cost data within Q2’s National Accounts vindicating the Reserve Bank of Australia’s recently hawkish tone, former RBA economists told MNI, adding the cash rate is likely to hold at 4.35% until early 2025.  

RBA overnight index swaps market have priced in a 4.10% cash rate by the end of the year, however, traders have probably overestimated the influence of a U.S. Federal Reserve September cut, said Sean Langcake, head of macroeconomic forecasting at BIS Oxford Economics and a former RBA economist.

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MNI (MELBOURNE) - Financial markets have mispriced the chance of a 25 basis point rate cut by the end of the year, with price and unit labour cost data within Q2’s National Accounts vindicating the Reserve Bank of Australia’s recently hawkish tone, former RBA economists told MNI, adding the cash rate is likely to hold at 4.35% until early 2025.  

RBA overnight index swaps market have priced in a 4.10% cash rate by the end of the year, however, traders have probably overestimated the influence of a U.S. Federal Reserve September cut, said Sean Langcake, head of macroeconomic forecasting at BIS Oxford Economics and a former RBA economist.

Keep reading...Show less