Today’s 25bp rate cut to 7.0% confirms the Reserve Bank of Australia’s (RBA’s) shift in focus from inflation towards growth concerns. The RBA had previously been one of the most hawkish central banks – continuing to raise rates even when the US Fed was cutting aggressively – so Australian rates have been relatively high. We expect the pace of future cuts to be slow, given that inflation (currently 4.5%) remains well above the 2-3% target. Nonetheless, the fact that the RBA is now ready to reverse course should add to the general sense that interest rates elsewhere are also at or close to a peak.