RBC now expects RBA to cut rates to 1.50% by mid-2016

RBC sees a weaker economy and investment.

Economists at RBC continue to expect a rate cut from the RBA at the May meeting but now they also see another 50 basis points of cuts by the end of 2016, bringing rates down to a record low 1.50%.

They see further weakness in commodity prices and terms of trade, a weaker outlook for business investment along with faltering business confidence, and a sticky currency.

They say Stevens will head to the sidelines for at least six months after a May cut followed by a cut late in the year and one in the second quarter of next year.