MNI RBA Preview-March 2025: April Hold, Watch Pre-May 20 Data

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EXECUTIVE SUMMARY: 

• The next RBA decision is on April 1 and it is widely expected to keep rates at 4.10% after sounding very cautious when it cut 25bp on February 18. Governor Bullock warned that one rate cut did not mean another would automatically follow as “upside risks remain” and that market pricing was too optimistic.
• The Board is likely to reiterate its data dependence, while the economy since February has developed broadly as it expected. Given that unchanged policy is projected, the statement will be scrutinised for any moderation in February’s cautious tone.
• While a 25bp rate cut in April is given only a 5% probability, a cumulative 71bps of easing is priced by year-end. The market’s reluctance to price in a cut for tomorrow reflects the RBA’s cautiousness surrounding February's easing.
• The prospects for a rate cut at the May 20 meeting are open given it occurs after Q1 CPI on April 30, Q1 WPI May 14, two sets of jobs data, the election and will include updated RBA projections which are likely to include more details on US tariffs.