VIEW: CBA expect "the RBA to cut the cash.......>

RBA: VIEW: CBA expect "the RBA to cut the cash rate by 25bp to 1.25% on 4 June

2019. A further rate cut looks probable and we think that it will most likely

arrive at the August Board meeting. The risk is that a second rate cut arrives

later than August. We believe that the probability of the cash rate going below

1.0% is very low. Monetary policy has been unchanged in Australia since August

2016. But today the RBA moved to an explicit easing bias. Governor Philip Lowe

today stated that, "at our meeting in two weeks' time, we will consider the case

for lower interest rates." The RBA are reluctant rate cutters. We have known

that for some time. Indeed the cash rate has not been lowered under Governor

Philip Lowe. However, persistently below target inflation, below trend GDP

growth and a slight rise in the unemployment rate mean that policy easing now

looks imminent. We had long been of the view that a cash rate of 1.5% would be

the low point of the cycle. And financial market pricing was broadly consistent

with this view until late-2018. Since then, markets have increasingly priced in

rate cuts even though the RBA has had a neutral bias since February 2019 (recall

that the RBA had a tightening bias throughout 2018)."