All 39 economists surveyed by Reuters anticipate that the Reserve Bank of Australia (RBA) will maintain the cash rate at 4.10% on April 1. There are predictions of two rate cuts in 2025, with estimates of 25 basis points in May and September, reducing the rate to 3.60% by the third quarter.
The RBA is expected to take a cautious approach due to core inflation at 3.2%, low unemployment, and a recovering economy. Approximately 75% of economists foresee a May cut, dependent on first-quarter inflation data.
Market expectations and analyst perspective
Major banks agree on holding the current rate in April but vary in the timing and extent of potential cuts. Market expectations align with the poll, while analysts note that the RBA is aware of the risks of over-easing, which might trigger inflation again. A statement from the RBA will be released at 2:30 PM Sydney time on April 1, followed by a press conference with Governor Bullock.
What the article outlines is a broadly shared expectation among professional economists that the Reserve Bank is likely to hold steady, keeping its benchmark interest rate at 4.10% for now. The unanimous forecast suggests strong confidence among market watchers that no immediate changes are coming in April. In more practical terms, this sets a short-term holding pattern for interest-rate strategy as inflation remains above the RBA’s preferred range and joblessness is relatively low.
In plain terms, the cash rate isn’t likely to drop straight away, and those trading rate-sensitive instruments or exposures need to discard any hopes of an early cut this side of May. However, looking a bit further out, most surveyed experts are leaning towards two possible moves in 2025: one in May and another in September, both expected to be 25 basis-point downward steps. That would put the policy rate somewhere near 3.60% come the third quarter of next year, assuming the inflation metric confirms broader disinflation ahead.
Bullock and the rest of the board are threading the needle between maintaining restraint and not over-tightening. They’re reluctant to lower rates too aggressively, as that could give inflation ample room to pick up again, undoing the work already done. That reluctance has its reasons. Core inflation still sits above the targeted comfort zone at 3.2%, and Australia’s labour market doesn’t look overly stressed—hardly a backdrop that demands looser policy just yet.
Focus on data before rate move
The bulk of expectations for a shift in May hinge on upcoming inflation data covering the first quarter. If we see price growth tracking lower in that release, which occurs before the May meeting, then the basis for easing strengthens. The data must show actual, measurable progress towards the 2–3% target range before Bullock and colleagues make a move.
The larger banks forecast the same April inaction but don’t quite align when the first rate reduction lands. Commonwealth, for instance, sees scope earlier than Westpac, but both are looking in the same general direction.
Given what’s priced into the forwards and short-term interest rate markets, traders would do well to match their near-term positioning with the base case: no April cut. But there’s room to accumulate exposures that start to benefit as the first hints of a softening rate environment emerge from the second quarter onward. Long durations might see better support if inflation does soften.
We are watching for the statement and press conference slated for 2:30 PM in Sydney on 1 April. That will likely give sharper clues about how tight the Board sees the corridor between growth and inflation pressure. Pay careful attention to the language shifts—small changes in phrasing could hint at growing willingness to act if conditions slide into place.
Hawkish caution remains the theme until data convinces otherwise. Those hoping for a change in tone need to focus on the exact figures in the price and employment series. That’s where a shift can be expected to take shape.
