RBA will eventually push the QE button

The drop in the unemployment rate in September means that the RBA won’t cut interest rates in November. But we still expect the labour market and underlying inflation to weaken over the coming months. With inflation expectations already falling through the lower end of the RBA’s 2% target band, we now think the Bank will respond by slashing rates to 0.25% by early-2020 and eventually launch quantitative easing.