Market Insights: Why the RBA cut and could cut again

shopping

The recently released minutes to the Reserve Bank of Australia’s May policy meeting – at which it cut official interest rates – highlighted the fact that it was near-term downside risks to inflation, not economic growth, that encouraged the Bank to act. Given the challenge of pushing underlying inflation back up, it seems likely that the RBA will cut interest rates at least once more this year. Ultimately, however, this is a very pro-growth development which could usher in a return to above-trend economic growth and better stock market performance.