Via David Uren:
The IMF has urged the Reserve Bank to slash rates in a much more pessimistic analysis of the outlook than presented in the bank’s latest forecast, arguing the economy is at risk of getting caught in a Japanese-style low inflation and low growth trap.
The fund presents extraordinary modelling showing the Reserve Bank should halve its policy rate over the next six months to 0.75 per cent, which it says is the effective “lower bound” for nominal rates in Australia.