Probability of an RBA rate cut in February continues to decline

Omkar Godbole FXStreet Contributor

The chances of an RBA rate cut in February got dimmer following the release of a better-than-expected Australian inflation data for December.

The overnight index swap (OIS) market is now pricing just 12% probability of the Reserve Bank of Australia (RBA) cutting interest rates by 25 basis points next Tuesday, according to data tweeted by RANsquawk.

The markets were pricing about a 20% chance of a rate cut next week before the release of the Australian inflation data.

In fact, the probability of a February rate cut stood at more than 60% a week ago. The odds, however, dropped following last week's upbeat employment report.

Currently, RBA's interest rate stands at 0.75%. The central bank delivered three 25 basis point rate cuts in 2019 and is widely expected to cut rates in May.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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