From The Australian:
Speculation of another rate cut in Australia continues to grow, with overnight indexed swaps now pricing in a 40% chance of a 25 basis point cut next August. Expectations on the peak probability of a rate cut have risen from about 12% in the past two weeks.
While the market is some way from fully pricing in a rate cut, 40% is quite a substantial probability. Contrary to the consensus of economists, which is for a 25 basis point hike in Q315, Q415 and Q415, the market sees no chance of a rate hike in the next 12 months.
A number of economists recently lowered their 2015 GDP forecasts, with Goldman Sachs moving down to 2%, but Credit Suisse and Saxo Bank are currently the only institutions forecasting rate cuts in Australia.
China’s rate cuts last week and expectations of more policy action from China may encourage economists to hold onto their views, but the lack of recovery in iron ore prices will be weighing on growth expectations.
I;d bet it will be earlier than August.