RBA’s next move will still be a rate cut, say investors

While bond traders are pricing in a 50 per cent chance of another rate increase in Australia before Christmas to keep a lid on inflation, some pundits say the fears are overblown with the next move in the cash rate still likely to be lower.

Bond markets swung violently last week after a key inflation gauge missed expectations, prompting speculation the Reserve Bank of Australia will have to upgrade its forecasts when it meets next week to reflect the slow progress.