RBA still likely to cut before long

The Reserve Bank of Australia made only the slightest downward revisions to its forecasts when it left interest rates unchanged at 1.50% today. But it noted that further improvements in the labour market will be needed for meeting its inflation target, which we consider unlikely. All told, we now expect the Bank to cut interest rates to 1.0% over the coming months instead of our previous forecast of 0.75%.