Australia’s cash rate more likely to rise than fall

The Reserve Bank of Australia (RBA) held its cash rate at 4.75% today, as was widely anticipated. A run of poor economic data has prompted market participants to expect that the next move in the cash rate is likely to be down. We disagree, although we have adjusted our forecast profile and now see a more drawn out tightening cycle. We expect the cash rate to be raised in Q4.

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