RBA’s dovish tilt won’t bring an earlier rate cut

The Reserve Bank of Australia struck a rather dovish tone at its meeting this week. As a result, markets see a growing chance that the Bank will begin its easing cycle as soon as February. However, with employment still running above what the RBA deems to be its maximum sustainable level, we doubt the Bank will want to risk loosening policy prematurely. The upshot is that we still expect the first rate cut to come only in May.