RBA Delivers Expected 25bp Cut to 3.60%

• As widely anticipated, the RBA reduced the cash rate by 25bps to 3.60%, citing further moderation in core inflation and a slight easing in labour market conditions.
• The August Statement on Monetary Policy kept unemployment and inflation forecasts unchanged but downgraded longer-term productivity assumptions, with trend GDP growth now expected at ~2%.
• The tone from both the SoMP and Governor Bullock’s press conference was modestly dovish, with the implied cash rate path pointing to 2.9% being consistent with target inflation.
• In the US, Core CPI rose 0.32% m/m (vs 0.3% consensus), taking the annual rate to 3.1%. This has prompted markets to slightly increase pricing for a September Fed rate cut to 24.1bps, up from 21.9bps pre-release.