As expected, the Reserve Bank of Australia (RBA) monetary policy board cut interest rates on Tuesday. What was less expected, perhaps, was its very dovish language in the accompanying statements, which represented a significant shift in tone since the board’s last meeting.
Seven weeks ago, the RBA board sanctioned a grudging 25 basis point cut in interest rates and warned markets not to get ahead of themselves in anticipating more cuts this year. Inflation was coming down, but not enough, and it was still considered a flight risk. A great deal has changed since then on the international and domestic fronts.
