RBA Poised for May Rate Cut Amid Cooling Inflation and Global Uncertainties
- Sean G
- May 17
- 1 min read
The Reserve Bank of Australia (RBA) is widely expected to reduce the official cash rate by 25 basis points to 3.85% at its upcoming policy meeting on May 20. This anticipated move comes as inflation moderates and global economic uncertainties persist.
A Reuters poll conducted between May 12 and 15 indicates that the majority of economists foresee this rate cut, with expectations of two additional reductions later in the year, potentially bringing the rate down to 3.35% by year-end.
The Commonwealth Bank of Australia's chief economist, Gareth Aird, supports this outlook, suggesting that the RBA may implement further cuts in August and November.
The anticipated rate cut is driven by several factors:
Moderating Inflation: Core inflation has eased to 2.9% in the first quarter, aligning with the RBA's target range.
Global Economic Uncertainties: Ongoing concerns over international trade tensions and economic growth are influencing the RBA's cautious approach.
Housing Market Dynamics: Lenders have begun reducing fixed and variable mortgage rates in anticipation of the RBA's decision, intensifying competition in the housing loan market.
While the majority of experts predict a 25 basis point cut, some, including the National Australia Bank, anticipate a more aggressive 50 basis point reduction. The RBA's decision will be closely watched by homeowners and investors alike, as it will influence borrowing costs and economic activity in the coming months.
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