Deutsche Bank economist predicts 50 basis point RBA rate cut in May

As reported by Bloomberg, Deutsche Bank economist Phil Odonaghoe predicts an unprecedented 50 basis point rate cut by the Reserve Bank of Australia (RBA) in May. Odonaghoe's forecast is guided by the impact of US tariffs on Australian business and consumer confidence, as well as the country's economic growth.

He forecasts the interest rate to fall to 3.6% on May 20 and to 3.1% by the end of the year, with two further 25 basis point cuts.

Odonaghoe is the first economist in the organization to voice such a significant reduction in the RBA's borrowing costs. His forecast is ahead of market expectations, which assume four rate cuts, with a 40% chance of a 50 basis point change in May, according to the agency.

Odonaghoe said that global tariff risks, particularly escalating tensions between the United States and China, outweigh domestic economic factors and require an aggressive response from the RBA. He defends his position by citing historical precedents.