The Bank of Coravia held its key rate at 3.25 per cent on Wednesday for a fifth consecutive meeting, but shifted its language in a way markets read as the prelude to an autumn cut.
Inflation slowed to 2.6 per cent in June, a two-year low, while wage growth eased for a third month. The bank’s statement dropped its long-standing warning about “persistent domestic pressures” and replaced it with a single sentence traders seized on: “the balance of risks is shifting”.
“We do not pre-commit. We prepare,” Governor Liese Andor told reporters, confirming that the September meeting will carry a full forecast round — the bank’s customary staging ground for policy turns.
Two of the seven-member committee voted for an immediate quarter-point cut, the first split since January. Economists at the Meridale Exchange now put the odds of a September move at even, with November “the base case”.
The decision lands in a warm economy rather than a cold one: the MDX 500 sits at a record, construction order books are filling on Coastal Shield contracts, and unemployment, at 4.1 per cent, remains near its decade low. The bank’s dilemma, as Andor put it, is “easing into strength without reigniting what we have just put out”.