Weekend Economist: Two-way bet?

It's curious the Governor has increased the barrier for a rate cut, while arguing for a lower Australian dollar as well.

On December 4, last week we changed our interest rate forecast to expect a rate cut of 25 basis points in February to be followed by a second cut of 25 basis points in March. By yesterday the market had moved to price in a probability of 40 per cent for a rate cut next February and 70 per cent for one cut by March. Another way to look at this is to note that the market expects 18 basis points of cuts by March compared to our own view of 50 basis points of cuts.

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