MNI RBA Review-August 2025: Target Achieved With More Cuts

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EXECUTIVE SUMMARY: 

• The RBA made the unanimous decision to cut rates 25bp to 3.60%, as expected, with a larger move was not discussed. 
• Around another 75bp of easing is assumed in the updated staff forecasts which results in underlying inflation at around the 2.5% band mid-point from H2 2025. Thus, more rate cuts are likely going forward dependent on the data developing broadly as the RBA expects 
• Governor Bullock said that the Board continues to take things at a “measured pace”. While, she didn’t rule out “back-to-back cuts”, the next rate reduction is likely to again coincide with the Statement on Monetary Policy, which will be on November 4
• RBA-dated OIS pricing has a 25bp rate cut in September is given a 37% probability, with a cumulative 52bps of easing priced by year-end.