RBA Will Cut Rates Deeper Than Markets Expect, CBA Says

Monetary policy in Australia is gaining more traction than in the US even though the Reserve Bank raised interest rates by less than the Federal Reserve, suggesting the easing cycle Down Under will be more aggressive than market pricing implies, Commonwealth Bank of Australia said.

The RBA hiked its cash rate by 4.25 percentage points in the current tightening cycle compared with the Fed’s 5.25 points. Yet the average US outstanding mortgage rate has only risen 50-basis points, versus Australia’s 320, Gareth Aird, head of Australia economics at CBA, said in a research note on Friday.