Investors are betting an Australian rate cut is a done deal after Reserve Bank Governor Glenn Stevens indicated the local dollar’s world-beating losses aren’t enough to bolster growth.
Traders see a 95 percent chance the RBA will cut the cash rate by a quarter-percentage point to 2.5 percent at an Aug. 6 meeting, up from 51 percent odds seen at the beginning of July, swaps data compiled by Bloomberg show. The central bank will probably drop the benchmark to 2.25 percent or lower by year-end, the data show.
“Stevens has pretty much told you that he’s cutting rates next week,” said Ray Attrill, the Sydney-based global co-head of currency strategy at National Australia Bank Ltd. (NAB) “We got the message that further currency depreciation doesn’t mean they need to be thinking about pulling interest-rate policy levers into reverse any time soon.”
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