Australian rates still likely to be cut to 1.5% this year

We believe that the Reserve Bank of Australia’s decision not to follow last month’s rate cut to 2.25% with another reduction today is just a pause in a loosening cycle that will take rates down to 1.5% by the end of this year. Such a fall below the markets' expectations could prompt the Australian dollar to weaken from US$0.78 now to around US$0.70.

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