The economic data have continued to deteriorate in line with our forecasts. In particular, the unemployment rate rose again to 5.3% in October and real retail sales declined in Q3 despite the government’s tax cuts. Even so, the RBA has recently sounded cautious so we think they will keep rates on hold at the meeting on Tuesday 3rd December. Instead, we think the Bank will wait until February to cut rates again. Further ahead we think it will cut rates to 0.25% and launch quantitative easing by the middle of next year.
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