The Reserve Bank of Australia (RBA) has cut interest rates down under for the third time this year, a move that has been widely called by just about everybody.
This time, we haven’t had a July upset with a surprise RBA hold.
The ASX200 jumped a few points in the immediate moments after the decision, but as of 2.35pm AEST, the jump wasn’t too dramatic. The bourse traded sideways for most of the day and in the immediate moments following the decision, sort of kept doing that.
3pm AEST update: Half an hour later, the bourse hit 8,875pts – a new record high from which it then dipped back down; suggesting that fresh all time high represents a psychological level. (That said, there’s still an hour left to go.)
Then again, that mightn’t be surprising. After all, many believed the ASX200 had already priced in the cut, maybe explaining why we’ve stayed above 8,800pts so far this week.
For now, market consensus dictates we’ll see three more cuts ahead of May 2026, and assuming the RBA doesn’t make another cut this year until Q4CY2026, the bank to rule them all is effectively cutting rates once-a-quarter (if you allow some creative juggling.)
To be fair, this rate cut was widely locked in by recent-enough jobs data in Australia that showed far less jobs added to the economy than what was expected; this was widely taken as a sign the economy was starting to cool down, and that now was the time for a cut.
Clearly, the RBA board agreed. Even after Michele Bullock warned Australia not to get too hype about an August rate cut. What does make matters interesting is that we got a resumption of global tariffs last week, but, Austraia is expected to remain insulated, and the ASX200 for its part didn’t care.
(I will also admit here that I was being overly cautious in recent weeks when I said I was still 50/50 on an August rate cut, though, it’s not like the RBA hasn’t been proudly cautious itself.)
So what does Tuesday’s rate cut mean? Probably a good time to snap up some real estate stocks, for one. It’s also evidence that Australia’s inflation trajectory remains more or less under control (at least compared to recent years) and that, above all else, the RBA’s economic chemotherapy plan has worked.
As long as you ignore homeless rate increases, massive increases to calls for financial support and advice, a rise in calls to distress hotlines…so on and so forth. But that’s maybe a bit depressing, if not unfair to bring up (though, undeniably, an economic indicator.)
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