Australian Interest Rates: Q4 Market Outlook

- The Australian economy is in recovery with growth accelerating, inflation near the target and the labour market close to full employment - RaboResearch forecasts that the Reserve Bank will deliver three more 25bp cuts between now and May 2026 as falling inflation, continued labour market softening and trade headwinds eliminate the case for restrictive monetary policy - RaboResearch expects short-end Aussie sovereign yields to fall as the market reprices Cash Rate expectations lower - We believe that long end yields are likely to remain elevated and anchored by the US Treasury market - We see some scope for lower swap rates of 1-3 year tenors