25 basis points cut to improve transmission

Economic conditions have converged in favour of another rate cut by the MPC in the April review.  Indeed, domestic interest rate markets are pricing in 100% probability of a 25 bps rate cut and are pricing more than 50 bps cuts cumulatively over next six months.
 
The key change from February is that inflation outcomes have been better than expected and growth outcomes weaker.  Q4FY19 inflation may undershoot the February estimate.  Cons­ensus expectation for FY20 average inflation is now below 4%.  The question for MPC is whether inflation would further undershoot its own FY20 expectations.  There are reasons to