Overview

• Traders are pricing in a 95% likelihood that the Reserve Bank of Australia will cut the cash rate by 25 basis points to 3.85% on May 20, marking the second reduction this year.
• Trimmed mean inflation has moderated to 2.9%, within the RBA's target range of 2–3%, providing room for easing monetary policy.
• A 25 basis point cut could save mortgaged households approximately $90–$114 per month, depending on loan size, with banks likely to pass on the reduction due to competitive pressures.
• Economists remain divided on the pace and extent of future rate cuts, with some predicting further reductions while the RBA emphasizes caution to ensure inflation remains controlled.
• Housing demand and property prices are expected to rise following the rate cut, though affordability constraints and limited supply may temper the market's response.