The Reserve Bank is widely expected to deliver its first cash rate reduction in five years this week, but the decision will be a line-ball call as economists warn that persistently high labour costs could keep inflation elevated.
Money markets on Sunday implied a 96 per cent chance the RBA will reduce the cash rate to 4.1 per cent from 4.35 per cent on Tuesday, as inflation is cooling at a faster clip than anticipated. Core inflation, the central bank’s preferred gauge, slowed to 3.2 per cent in the December quarter, in sight of the RBA’s 2 per cent to 3 per cent target.
Source: https://www.afr.com/markets/equity-markets/markets-expect-hawkish-interest-rate-cut-from-rba-this-week-20250216-p5lcgr