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RBA to launch QE as inflation weakens further

Underlying inflation was moored well below the lower end of the RBA’s 2-3% target band even as the housing market was booming and the labour market was tightening. With the unemployment rate set to rise to 5.5% next year and interest rate cuts increasingly ineffective, it would be naïve to expect inflation to reach the Bank’s target anytime soon. The upshot is that we now expect the RBA to cut rates to 0.25% by early next year and launch quantitative easing sometime in 2020.

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