- The Reserve Bank of Australia (RBA) is expected to hold its cash rate at 4.35% due to strong economic activity and persistent core inflation. Major Australian banks project the RBA will begin cutting rates in early 2025.
- The Bank of England (BoE) is widely expected to cut rates by 25 basis points, even as the Chancellor’s new budget has raised inflation forecasts.
Two major central bank decisions this week join the U.S. election as key events for markets, with interest rate reductions from the Reserve Bank of Australia and the Bank of England being considered.
The RBA will announce its decision Tuesday (local time), with economists polled by Reuters forecasting no change to the current 4.35% cash rate. Persistently robust economic activity and sticky core inflation are thought to be keeping the central bank cautious. All major Australian banks—ANZ, CBA, NAB, and Westpac—expect the RBA to hold steady through year-end, projecting the first rate cut to come in February 2025.
Meanwhile, the BoE is anticipated to lower its Bank Rate by 25-basis points on Thursday (local time), bringing it to 4.75%, according to a Reuters poll. Last week Britain’s finance minister Rachel Reeves unveiled an unexpectedly large increase in borrowing and public spending, which prompted the Office for Budget Responsibility to raise inflation forecasts. However, analysts suggest that these fiscal moves won’t likely disrupt the BoE’s path toward a rate cut this week.
