Calls for Australia’s central bank to cut interest rates as early as next month 

increased significantly on Wednesday, a Reuters poll showed, as first-quarter inflation 

data was disappointingly weak.

The Reserve Bank of Australia (RBA) has left policy at a record low 1.50 percent 

since last easing in August 2016. But this record spell of unchanged rates is likely 

to break with 12 of 23 economists now predicting a cut on May 7.

A raft of banks from ANZ to ING, JPMorgan and Citi are among those forecasting a May 


That is a sharp turnaround from the previous poll in March when the median view of 

45 economists was for stable rates until early 2021.

The median view of 23 economists is now for 1.00 percent over that horizon.

Expectations changed rapidly after official data on Wednesday showed consumer price 

inflation inflation slowed sharply last quarter to the lowest in three years.

Key measures of underlying inflation favoured by the Reserve Bank of Australia (RBA) 

averaged 1.4 percent for the year, again missing forecasts and marking 13 quarters 

below the central bank’s target range of 2 to 3 percent.

“The downward surprise to core inflation in Q1 leaves the RBA with little choice 

but to cut the cash rate by 25 basis point at its May meeting,” ANZ economists said 

in a note on Wednesday.

“We have doubts that modest rate cuts will do much to push inflation sustainably higher,

but it’s hard to see that the RBA has much choice but to use the tool at its disposal, 

ie a lower cash rate.”

The change in the outlook accompanies disappointing fourth-quarter gross domestic 

product data for March quarter while retail sales – a gauge of consumer health – have

also remained tepid for some time now.

The RBA shifted away from its long-held tightening bias earlier this year to put rate 

cuts on the table citing a slowing local economy and broader global risks such as

the ongoing Sino-U.S. trade war and rise of populism.

Minutes of the RBA’s April policy meeting showed it now believes a cut would be

“appropriate” should inflation stay low and unemployment trend higher.

 Reuters/APRIL 24, 2019 

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