Rate cut probabilities

David Llewellyn-Smith

Thursday, 28 June 2012

So, the market is daily repricing the probability of the July rate out of existence:

We’re down to a one in four shot. This will be old news to regular readers.

More interesting are the probabilities attached to future RBA meets:

That’s a 94% chance of 25bps in August and again in September and high probability attached to 2.50 rates by March next year

More aggressive than I think given a steady state economy but in the ball park.

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.