Less "dovish" RBA may pause on further rate cuts: HSBC's Paul Bloxham

The short statement accompanying the RBA's decision to cut the cash rate to 2.5% is "less dovish" but still leaves room for further rate cuts, says HSBC Australia and New Zealand chief economist Paul Bloxham.

He notes that the RBA "did not explicitly indicate that the inflation outlook provided 'scope' for further easing from here, as previous statements had done".

"They did, however, still suggest that the Australian dollar was a bit too high for them to be comfortable.

"Markets are currently pricing in a further cut this year.

"While this is possible, we are of the view that today's cut could be the last for this easing phase, as the lower Australian dollar is doing a lot of the work for the RBA already and is also an upside risk to the inflation outlook.

"With a federal election now due to occur on September 7, it seems highly unlikely that the RBA would cut rates next month (4 days before the election) - meaning the next likely opportunity is October or November.

Between now and October/November we have a local Federal election, on September 7, and there are significant global developments that may have a bearing ont he Australian dollar in particular.

"Further weakness in the Australian dollar may obviate the need for another rate cut, as it would be supportive of growth,"says Bloxham.