Australian CPI data released this week will have gone a long way toward assuaging the RBA's concerns about lingering price pressures in the economy. And although retail sales picked up strongly in June, they are likely overstating the momentum behind consumer spending. All told, the RBA is almost certain to cut rates by 25bp at its meeting in two weeks’ time. Moreover, given our relatively downbeat outlook for activity and inflation, we continue to believe the Bank will loosen policy more than most analysts are predicting.
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