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Economic outlook is subdued regardless of tariffs

Our forecast that the housing downturn would weigh on economic activity and force the RBA to cut rates was proven right this week. And given recent data suggest there is considerable spare capacity in the economy, we believe the RBA will have to reduce rates further to 0.75% by the end of the year from 1.25% today. Meanwhile, concerns of potential tariffs from the US on Australia are overblown.

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