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Following the Reserve Bank’s historic cash rate call earlier this month, one popular lender has given its take on if and when further rate cuts will be on the table.
On 2 July, the RBA slashed the cash rate to a new record low of 1 per cent, which was the second consecutive cut this year.
ING’s July Banking Guide indicated that the lender was surprised at the RBA’s strategy and predicted the next cut won’t be quite as quick.
“The RBA is not going to rush the next cut and we may have quite a pause for them to digest how the first cuts are working out,” ING said.
“We thought the RBA might take more time with their earlier cuts, so (we) are a bit surprised at this approach, but it can be rationalised as trying to get the most out of what is a very limited supply of ammunition of questionable effectiveness,” ING said.
Given the RBA is unlikely to hit its inflation and unemployment targets with these two consecutive cuts, another is in the works, ING suggested.
“We now see rates troughing at 0.75 per cent after one more rate cut in the fourth quarter, though this is dependent on some slightly stronger price and activity data,” ING said.