Jamieson Coote Bonds - May Update

The RBA cut rates in May and will deliver another 25 bps cut by August, taking the cash rate to 1.50%. This has been JCB's core thesis for some time, however, we would caution investors about getting overly excited about further rate cuts given the current data at hand. Many market commentators who did not forecast these moves are now calling for 1.00% RBA rates by year end. This looks excessive in our opinion, they are playing catch up here. Whilst RBA Governor Stevens stridently defended inflation targeting this month, calling it the ‘’best policy framework we’ve ever had’’ a period of pause and access is warranted from the RBA from 1.50%, after providing the economy with additional stimulus via lower rates and currency