There are growing signs that Australia's economic recovery is struggling for momentum. Moreover, both CPI data and business surveys suggest that this weakness in activity is translating into softer inflationary pressures. Against this backdrop, we believe there is a compelling case for the RBA to loosen policy more aggressively than we previously anticipated. Accordingly, we've brought forward our forecast for the Bank's next 25bp cut from August to July and lowered our forecast for the terminal rate from 3.35% to 2.85%.
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