The firm sees a total of 50 bps rate cut before the year is over
In a research note, the firm's economist, Justin Fabo, argues that it would take a surprise turnaround in global growth and/or a decline in the unemployment rate for the RBA not to ease policy again this year.
Adding that:
"Our sense is that the risks are skewed towards a modestly higher unemployment rate in the next couple of months. For that reason, we now expect the bank to cut by 25 bps in both October and November. We had previously put a 'stake in the ground' at 0.50% for the cash rate further out so we are bringing that call forward. RBA governor Lowe isn't going to die wondering and leave rates ammunition on the table."
The RBA held off on any surprise "insurance cut" today but given their language and recent global developments, one more rate cut is certainly set for Q4 but if domestic developments deteriorate sharply, then two cuts is definitely a distinct possibility.
