WHAT THE ECONOMISTS SAY
Adam Boyton, Deutsche Bank The lack of any forward guidance in the final paragraph has us concluding the statement is a little less dovish than the market might have been expecting ... The case for the next rate cut needs to be built from scratch.
Ivan Colhoun, ANZ It's an evolution of recent thinking rather than a revolution. Their statement on monetary policy on Friday will be very closely watched by the market because it will give more information about what they're thinking about the outlook for growth and perhaps the outlook for unemployment.
Kieran Davies, Barclays We are surprised that the RBA did not repeat the easing bias as it would have placed some additional downward pressure on the exchange rate.
Paul Bloxham, HSBC Markets are pricing in a further cut this year. While this is possible, we are of the view that [Tuesday's] cut could be the last for this easing phase, as the lower Australian dollar is doing a lot of the work for the RBA already and is also an upside risk to the inflation outlook.
Scott Haslem, UBS First, there was no forward guidance. Little should be read into this, as it's relatively standard practice to provide minimal guidance on a cut, as was the case when they last cut in May ... We think the RBA is now on hold here for several months.
Greg Gibbs, RBS The risk is that [the dollar] continues to squeeze up as the market unwinds the risk of further near-term cuts. The RBA is in watch and wait mode. They would like to keep the dollar low but understand that cutting rates too quickly such that it projects a bottom is close will be counterproductive.
Frequently Asked Questions about this Article…
Economists quoted in the article noted the RBA moved from a consistent easing bias back to a neutral bias. That shift matters for investors because a neutral bias suggests the central bank is less committed to cutting rates further, which can affect mortgage rates, bond yields and share market expectations.
Several economists highlighted the absence of forward guidance, saying it made the statement slightly less dovish than markets might have expected. For everyday investors, this means the case for another rate cut isn’t being signalled clearly by the RBA and markets may need fresh data to reprice expectations.
Yes — markets have been pricing in further cuts, but economists caution against taking that as a certainty. Some firms said another cut is possible, while others argued the recent lower Australian dollar and a neutral RBA stance reduce the likelihood of near-term easing.
Economists pointed out the lower Australian dollar is already helping the RBA by supporting inflation, reducing the immediate need for more rate cuts. Investors should watch currency movements because a stronger AUD could add upside pressure to inflation and influence the RBA back toward cutting or pausing.
‘Watch and wait’ or the view that the RBA is ‘on hold’ means policymakers are waiting for clearer signs on growth and unemployment before moving again. For investors, expect fewer surprises in the very near term; fixed-income markets and interest-rate-sensitive sectors may see lower volatility until fresh data emerges.
Analysts noted the RBA did not repeat an easing bias and provided minimal forward guidance, which made the statement less dovish than some had anticipated. In plain terms, the RBA wasn’t signalling more cuts were imminent, so markets had to reassess how likely further easing is.
Economists warned that if markets stop expecting near-term cuts, the Australian dollar could appreciate, potentially squeezing financial conditions and adding inflation risk. That scenario could make it harder for the RBA to pursue looser policy without stoking inflation.
The article shows economists can interpret the same RBA statement differently: some see an evolution to neutral, others note no forward guidance or expect a pause in cuts. For investors, the takeaway is to focus on data (growth, unemployment, inflation) and risk-manage portfolios rather than rely on a single forecast.
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