The firm previously saw only a 25 bps rate reduction by mid-next year
That's the most aggressive call among the 'Big Four' in Australia with Westpac, NAB and CBA all forecasting the RBA cash rate to be around 0.50% to 0.75% by the end of next year.
Analysts at the firm are of the view that the RBA will resume its easing cycle in October will continue to take the cash rate down to the effective lower bound:
"We think the RBA will judge that it has little choice but to ease further over the coming year, as the impact of the sharp domestic slowdown feeds into the labour market and the Bank is forced to respond to global policy settings."
The latest change in the above forecast isn't weighing much on the aussie though with AUD/USD holding near highs around 0.6816 currently.
