An unexpected change in tone from Reserve Bank of Australia governor Michele Bullock triggered a dramatic late afternoon plunge in bond yields after the central bank revealed it was less worried about inflation than it was about a sharp slowdown in the global economy.

As was expected, the RBA cut the cash rate by 25 basis points to 3.85 per cent in its second reduction this year, but revelations during the press conference that the board had considered an outsized 50 basis point move prompted traders to dial up their bets for further rate cuts.