Market Expectations for Australian Rate Hikes Decline

Following the release of weak employment data in April, expectations for further rate hikes by the Reserve Bank of Australia have diminished. According to Jin10, IG Markets analyst Tony Sycamore noted that the rate market had previously priced in a 4 basis point increase for the RBA's next meeting in June, but this expectation has now dropped to 1 basis point. Looking at the longer-term outlook, he added that the market had priced in a cumulative tightening of 33 basis points for the entire year of 2026, which has now decreased to 25 basis points. The terminal official cash rate is currently expected to be 4.60%, significantly lower than the forecast of 4.82% at the end of last month.