The RBA changed tact this week and shifted away from its long-held tightening bias to a neutral stance on interest rates. This move was accompanied by a new set of downgraded economic forecasts, which project that headline inflation will not return to target until 2020. However, we still believe the RBA is too optimistic and that, as the outlook deteriorates, the Bank will be forced to cut rates to 1.00% by early 2020.
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