RBA interest rates: Will Australia follow European Central Bank’s rate cut? It’s unlikely to happen soon

Already a subscriber?Picture this. It’s a Tuesday afternoon, and Reserve Bank governor Michele Bullock is striding to the podium at central bank’s headquarters in Sydney’s Martin Place to face a large contingent of journalists.

To be fair, this was the most telegraphed start to a rate-cutting cycle in a long time – the ECB has made it clear for months that it was ready to kick off an easing cycle, with Lagarde previously suggesting inflation has been tamed.We should not discount the sense of history here.

He argues Thursday night’s cut is a sign the ECB itself is changing, and that it has “regained confidence in its own forecasting skills and takes enough comfort from the benign inflation forecast from the second half of 2025 onwards to justify cutting rates. It’s like Asterix and his magic potion.” “For some time, we have been sceptical of the assumptions, particularly regarding productivity growth and slower wage growth, underpinning the ECB’s medium-term forecasts and see the risk that price pressures are stickier than the ECB anticipates,” he says.

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