CBA economists expect the Reserve Bank of Australia (RBA) to cut the cash rate by 25 basis points in July rather than August, with a further similar cut later in the year, probably November.
The expected cuts would reduce the cash rate to 0.75 per cent following an RBA cut earlier this month to 1.25 per cent.
Senior Economist Kristina Clifton from CBA’s Global Markets Research team said non-monetary policy options are also needed to stimulate the economy.
“The RBA has emphasised there is a need for other policy arms to step up to help lift economic growth and reduce unemployment, including more infrastructure spending as well as productivity enhancing reforms.”
Earlier this month, CBA's economics team examined the alternative montetary policy of Quantitative Easing (QE) to stimulate Australia's economy.
“While we doubt that the RBA will introduce QE in this economic cycle, the reality is that it could become a regular part of the policy tool kit in Australia as it is in other countries. This policy option could be used to stimulate economic growth and raise inflation if official interest rates are near the lower bound and other policy options have been exhausted,” CBA’s Head of Global Markets Research Stephen Halmarick said.