Financial markets rebounded through May with both major bond and equity markets higher, although performance was volatile over the course of the month as investors continued to digest variable inflation data as central banks continued to reiterate a higher-for-longer stance on cash rates. Domestically, the monthly inflation print was again stronger than market estimates, leading to some commentators suggesting that the RBA may still need to raise cash rates. We believe there is (virtually) zero probability of the RBA increasing cash rates and we believe that the next move will be down although it’s going to be a more protracted interest rate outlook through 20204 into 2025 given the ongoing inflationary pressures.
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