Via Capital Economics:
- The RBA will probably reduce its GDP growth forecasts
- but should still signal that the next move in rates will be up
- Our more pessimistic outlook for economic activity, the labour market and inflation suggest that the Bank may instead have to cut interest rates before long.
- We believe that the Bank continues to underestimate the threat from the weaker housing market
- Housing downturn and tighter credit conditions will weigh on GDP growth
- Unemployment rate should rise again and wage growth will weaken
- We now expect the Bank to lower interest rates to 1.25% by the end of the year and follow up with an additional 25bp cut in the first half of next year
When it cuts it will go two in quick succession. Then more next year when not enough happens.
Unless it leaves to too late and it will be panic slash and burn.