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RBA to cut cash rate twice next year by 25bps - ANZ

FXStreet (Bali) - The ANZ Research Team reviews the latest speech by RBA Governor Stevens on Tuesday, while reiterating that their core view remains that cash rate will be cut twice next year by 25bps, most likely in February and May.

Key Quotes

"RBA Governor Glenn Stevens spoke at an Australian Business Economists’ dinner in Sydney and offered a long term look at the big forces, many of them negative, impacting the economic outlook."

"Stevens' speech was less positive than the "glass half full" varieties that have been given as recently as 13 October by Deputy Governor Philip Lowe. But his comments were in line with the recent Statement on Monetary Policy in which the RBA's growth and inflation forecasts were lowered."

"When asked about the short term policy outlook, and particularly the February RBA board meeting, Stevens said we should just “chill out” over Christmas and “come back and see what the data say”. Saying that, there are a few crucial events for policy scheduled over the holiday period. These include the outcome of the US central bank policy meeting on 16-17 December, the next two Australian labour force reports and the December quarter CPI due on 27 January."

"Overall, we maintain our view that cash rate will be cut twice next year by 25bps, most likely in February and May."

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