Why This Giant Investor Thinks the RBA’s Next Move is a Rate Cut | The Bloomberg Australia Podcast

PIMCO's Adam Bo says the RBA is 'alert but no longer alarmed' on inflation, sees the hiking cycle as done, and expects the next move to be a rate cut in H2 2027. He argues Australian bonds are among the most attractive in developed markets due to favorable fiscal dynamics, strong demand, and the potential for capital appreciation when rates eventually fall.

Yields sideways , medium term, interviewee implicit

implicit

NDX cautious down , medium term, interviewee implicit

implicit

RUT cautious down

Oil volatile , short term, interviewee explicit

explicit

Metals sideways , medium term, gpt inferred

inferred

USD sideways , medium term, gpt inferred

inferred

PIMCO 8.5
Asset Manager $2100.00B
Adam Bo 9.5

Why This Giant Investor Thinks the RBA’s Next Move is a Rate Cut | The Bloomberg Australia Podcast

AUD; Australian rates; Australian mortgages; CPI

dxy

No explicit mention of USD; the focus on Australian bonds and RBA policy suggests a neutral view on the dollar relative to AUD.

metals

No explicit mention of metals; given the slowing growth outlook and restrictive monetary policy, demand for industrial metals is likely subdued.

ndx

Bo says equities are not broadly cheap and the economy is slowing, suggesting a cautious outlook for growth-sensitive indices like the Nasdaq.

rut

Bo highlights slowing domestic economy, weak consumer and business sentiment, and a per capita recession, which would pressure small-cap domestic stocks.

wti

If we get oil prices spiking back up to 150 or, God forbid, higher... external shocks happen and central banks feel compelled to respond.

3 calls

+1

no reliable edge (random outcomes)

4/10/2026 11:19:24 PM	medium term down	21 days later	+7.41%	-7.41%
3/25/2026 12:26:08 AM	short term up	5 days later	+7.30%	+7.30%
3/11/2026 3:30:55 PM	short term up	5 days later	+0.50%	+0.50%

Show all 3 wti results

yields

Adam Bo states the RBA will hold rates at 4.35% for an extended period (until H2 2027), implying yields will remain rangebound in the medium term.

Chris Burke

RBA left rates on hold at 4.35%, stepping back from an aggressive hike cycle, making them an outlier among major central banks.
Adam Bo

The RBA is 'alert to inflation risks but no longer alarmed'; data through 2026 shows the labor market hasn't retightened, sticky inflation components have improved, and consumer spending is moderating.
Chris Burke

What are the biggest challenges Australia's economy is still facing?
Adam Bo

The key challenge is the tension between higher inflation and a lower growth outlook; the RBA cannot control oil, fuel, electricity, or administered prices, but must tighten policy to slow growth and loosen labor markets.
Chris Burke

Governor Bullock said the slowing economy is expected and necessary to bring inflation down.
Adam Bo

PIMCO thinks the RBA is done hiking; the policy rate at 4.35% is the peak of the cycle, and the economy is already responding with slowing household spending, business sentiment, and house prices.
Chris Burke

Is there a caveat on how the US-Iran situation unfolds?
Adam Bo

External shocks like a Middle East conflict driving oil prices to $150 could force the RBA to respond to protect inflation expectations, but that is not the base case.
Chris Burke

So you see the next move as down for the RBA?
Adam Bo

The next move is down, but not until the second half of 2027; rates will remain restrictive for an extended period.
Chris Burke

What role are bonds playing in portfolios, and how have they performed this year?
Adam Bo

Bonds provide income through coupons and diversification benefits when risk assets underperform; currently, they also offer potential for capital appreciation as rates are at a peak.
Chris Burke

What are bond markets signaling about the economic outlook and rates?
Adam Bo

The Australian bond market is pricing a chance of one more hike near-term, then rates on hold around 4.35% for several years; PIMCO sees this as a mispricing on the longer end.
Chris Burke

Bloomberg reported that Australian debt offers the most compelling opportunity among major developed markets. Do you agree?
Adam Bo

Yes, Australian bonds are among the most attractive in developed markets due to favorable monetary policy pricing, better fiscal dynamics (debt/GDP below 40%, deficits ~1-2%), and strong technical demand-supply.
Chris Burke

How are investors navigating this environment, and where are they putting money to work?
Adam Bo

Valuations matter; few asset classes are genuinely cheap except high-quality fixed income, which offers favorable forward-looking returns. Bond allocations should be higher than in recent years.

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