It’s rate cut time again in July and even the hardnosed Reserve Bank board members know many Australians have copped high interest rate pain. Now it must be the gain that comes when the price we pay for loans come down. However, it does raise the new question that goes: Should it be a half a percent cut?

If forced to bet, I’d put my money on 0.25% but I think a 0.5% cut would be wiser. Such a move would not only help inflation fall faster by lowering costs to businesses, but also it would speed up economic growth for an economy that recorded a per capita recession in the March quarter.

When the growth number for the three months to the end of March came in at a low 0.2%, making the year’s number only 1.3%, this is what CBA economist Stephen Wu said: “The Aussie economy stalled at the beginning of 2025, barely growing, as consumers stayed stubbornly frugal, government spending sputtered, and extreme weather events weighed on exports. Aussie households and businesses remain cautious – as reflected in recent sentiment surveys – because of global trade uncertainty.”

Given the fall in jobs not created in May and weaker-than-expected retail numbers in March and April, there’s an argument that the economy needs a big shot in the arm that a surprise 0.5% cut could deliver.

After looking at the May Consumer Price Index figure released yesterday, which had headline inflation at 2.1% and underlying inflation at 2.4%, CBA’s Harry Ottey told us the following: “Commonwealth Bank (CBA) Group economists now expect the RBA to deliver further 25 basis point rate cuts in July and August for an end year cash rate of 3.35%.”

This doesn’t make my call for a 0.5% cut on July 8 so outlandish, given CBA economists are tipping two rate cuts in a row over July to August. If our economy is potentially as weak as the economists at the nation’s biggest bank claim (remember the CBA has the best window on what’s happening to Australian households because it’s the biggest lender in the country), then why not do a ‘shock and awe’ jumbo rate cut?

Unfortunately, the Reserve Bank interest rate setting board hasn’t been selected for their adventurous spirit and will probably argue that they need to keep their powder dry in case the Middle East truce doesn’t last and hostilities recommence and oil prices head towards US$150 a barrel.

I’ve said it before and I’ll say it again, former PM Paul Keating has often said that “the RBA is invariably late to the party” when it comes to cutting rates. In 2020, when even the Covid threat was huge for the economy, he said the Bank was having another of its “dalliances with indolence”.

And he didn’t miss them with this spray: "The problem about central banks, and this is true of the Reserve Bank of Australia - it has become a sort of deity, where lesser mortals might inquire, however respectfully, what the exalted priests might be thinking or have in mind for their prosperity or the country at large.

"The only difference between the deity and those to be governed is that the governor and his deputies do not wear clerical collars and black suits. But that is the only difference in their comport and attitude."

Let’s pray the RBA has some divine intervention and comes up with a miraculous big rate cut in two weeks time.