Insights 
VT 
In a recent poll, 31 out of 37 economists predict the Reserve Bank of Australia will reduce its cash rate by 25 basis points next week on July 8. Six expect no change, with forecasts suggesting a median cash rate of 3.10% by the end of 2025, down from the previous 3.35% forecast in May.
If implemented, this would be the third reduction this year, with predictions of four or possibly five rate cuts in total for 2023. The backdrop for the meeting is a context of easing inflation and a decelerating economy.
RBA’s Upcoming Announcement
The Reserve Bank of Australia’s announcement is scheduled for 2.30 pm local time on Tuesday, July 8. It will be followed by a news conference an hour later with Reserve Bank of Australia Governor Bullock.
We are now standing at a moment where a clearer pattern has begun to shape up in monetary policy. The Reserve Bank of Australia (RBA), having already taken two steps to adjust the cash rate earlier in the year, is now widely expected to continue with a third move next week. Lower inflation readings and slower economic expansion are no longer isolated developments—they’ve fed directly into the most recent expectations of the market.
The survey data reflects consistency rather than division, with the majority of forecasters aligned on a 25-basis-point rate cut. The few who expect no move are not necessarily outliers in the broader scheme, but they may be weighting short-term volatility over longer-term moderation. The median prediction for next year’s end-point now sits at 3.10%, with forecasts brought down from just a month ago. That tells us sentiment is adjusting faster than first thought, and that policy is expected to remain accommodative over a sustained period rather than reacting sharply to monthly data.
What Williams and others seem to be recognising is that the inflation picture is moving gradually in the right direction. There’s been a noticeable cooling—not dramatic, but clear enough—and wage growth, while still present, isn’t pushing upward in the same way as last year. As a result, there’s a natural path for easing, so long as the indicators keep tracking this way. It’s not a matter of reacting to one set of figures; this is looking at the shift over three or four quarters.
Market Reactions and Strategy
Financial markets, including futures and swaps, are already pricing this in. We’ve seen forward curves shifting lower since late May, consistent with this expectation. Any deviation from a cut now would imply something unseen has firmed up conditions in the past fortnight—which seems unlikely given current data. Several fixed income desks have already adjusted downside exposure in their short-term contracts, preparing for more moves to come over the second half of the year.
Governor Bullock’s upcoming press remarks will of course give added detail. But based on her previous communications, we’d anticipate an emphasis on keeping inflation heading toward the target range without disrupting employment too severely. She’s tended to speak in direct terms about balancing risks, particularly when the housing market remains sensitive to borrowing costs—something still true, if slightly less so than earlier this year.
For those trading rates derivatives, it remains important to position carefully around this developing trend. Fixed receivers may want to extend exposure given the broader bias in policy. However, overexposure ahead of Tuesday should be managed with hedges in place, as any hint of a pause or slower pace would immediately widen rate spreads, particularly on the volatile front end. We’ve maintained a dynamic bias within the shorter curve structures, adjusting strike ranges to capture modest easing without stretching into what would now be increasingly unlikely territory of six or more cuts.
Pay particular attention to the second part of Tuesday’s communication: the conference. The written decision will give the policy move, but the tone of the Q&A may reveal whether future actions will come in evenly spaced steps or pause if new data warrants it. Recent labour figures have offered enough slack that no immediate course correction seems needed, but as ever, conditions can turn with little notice.
Keep reassessing term structure every week. Carry advantages and rolldown haven’t disappeared, but the steeper portions of the curve have flattened, creating narrower entry value week by week. Those trading options might see tighter premiums around at-the-money strikes leading up to July’s meeting, so any implied volatility spikes post-announcement could offer a short window for restructuring.
These are the times when details in duration, convexity exposure and broker skew become keys, not footnotes. Watch closely how the market reacts not only at 2:30 but throughout the Asian and European sessions after. The message, if delivered clearly, should offer enough direction—it’s our job to stay ahead of it.
