Commerzbank Questions 50% RBA Rate Hike Odds as Downside Risks Emerge on July 2

According to Commerzbank strategist Volkmar Baur, the market is pricing in only a 50% probability that the Reserve Bank of Australia will raise rates again this year, but he disputes this assessment. Baur noted that upside risks linked to energy have diminished while downside risks from falling house prices are emerging, arguing that inflation would need to surge significantly to prompt the RBA to tighten policy further—a scenario he does not expect. He added that oil prices have continued to decline since the last meeting, reducing the previous risk tied to conflict-driven fossil fuel spikes. Instead, the primary downside risk centers on potential sharp declines in real estate prices, which could dampen consumer spending and weigh on economic growth.
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