All nine RBA board members are expected to back a 25-basis-point interest rate cut amid easing inflation.
The Reserve Bank of Australia (RBA) is expected to unanimously cut the cash rate by 25 bps to 3.6 per cent at its upcoming meeting, signalling a collective move to support the economy as inflation moderates.
Deutsche Bank chief economist Phil O’Donaghoe forecast a 9-0 vote in favour of the cut, a stark contrast to the 6-3 split decision to hold rates in July, while attributing the earlier split to the board’s desire to wait for clearer near-term inflation trends before easing policy further.
“The second-quarter consumer price index, rising 0.59 per cent quarter-on-quarter on the trimmed mean, is very much in line with the RBA’s expectations,” O’Donaghoe said. “Deputy governor Andrew Hauser described the CPI outcome as ‘very welcome’ and ‘very much as we had expected’, reinforcing the case for a rate cut.”
The July vote was the first time the RBA has publicly disclosed individual board votes under its new model, but the votes remain unattributed, leaving market watchers guessing about who sided with whom.
O’Donaghoe said the unanimous vote expected on Tuesday would remove much of that uncertainty, although the board’s external-member majority and diversity of backgrounds continue to make individual positions difficult to predict with certainty.
Judo Bank chief economic adviser Warren Hogan and economist Matthew De Pasquale agreed the market is “fully locked in” for a 25 bp reduction following July’s surprise hold.
While governor Michele Bullock has recently adopted a somewhat more hawkish tone, she continues to describe monetary policy as being in an easing cycle, the pair noted.
“A cut to 3.6 per cent will bring policy close to neutral, or slightly stimulatory, after 75 basis points of easing this year,” Hogan and De Pasquale said. “We expect the RBA to be on hold for an extended period after this week’s predicted cut, with recent stronger economic activity suggesting this may be the final reduction in the current cycle.”
Senior economist Bob Cunneen from MLC Asset Management echoed this view, pointing to subdued economic activity, modest consumer spending growth of 1.5 per cent annually, and an unemployment rate of 4.3 per cent in June – the highest since November 2021.
Cunneen said inflation has now fallen comfortably within the RBA’s 2–3 per cent target band, with headline inflation at 2.1 per cent and trimmed mean inflation at 2.7 per cent in the June quarter, providing the central bank with scope to lower interest rates.
“Yet an interest rate cut tomorrow is not a ‘certainty’,” Cunneen warned. “The RBA decision reflects a committee with 9 voting members… There may be disagreements and indeed divisions over the inflation risks.
“July’s surprising decision by the RBA to keep interest rates steady represented a majority view than to wait for more convincing evidence that ‘inflation would sustainably return to target as forecast before easing policy further’.
“Arguably this evidence is now available with the moderate June CPI data. However, the RBA can still point to some future risks that inflation could accelerate back above 3 per cent in the medium term.”
As at 8 August 2025, the ASX Rate Tracker has shown markets are predicting a 51 per cent chance of a 50 bp cut (to bring the cash rate down to 3.35 per cent), and 49 per cent expect no change.
