RBA keeps cash rate 3.85%. The Board voted 6-3.

I have a bit of an issue with this. 4 out of the big 4 banks all gave it a 100% probability of a 0.25% drop. How did they get it so wrong? As indicated by the ASX Rate Tracker this morning, they priced in a 97% chance of a rate cut at today’s meeting, with traders anticipating consecutive cuts in July and August, and potentially a third by November. Yet the RBA holds steady? Something does not add up here.

In its May 2025 meeting, the RBA cut the cash rate by 0.25% to 3.85%, with Governor Michele Bullock describing the move as “cautious” but noting the bank had “space” to act if needed. The RBA’s post-meeting statements emphasized cooling inflation (2.4% headline and 2.9% underlying in March 2025) and global trade risks, particularly from U.S. tariffs, which could dampen economic growth and inflation in Australia. This left the door open for further easing without committing to a specific timeline. Inflation is now 2.1% by the way. But sure, let’s keep rates steady.

So, although no direct message of an impending rate cut, the inference was there. And to have such as disconnect between the RBA, the big 4 banks and some pretty clever rates traders, the RBA needs to do a better job in its message deliverance. To me, this is poor management by the RBA. To have such an opaque central bank is worrisome.