If you think the RBA is done with cutting rates, think again, say economists

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While financial markets have all but written off the chance of a rate cut from the Reserve Bank of Australia next Tuesday, the same can’t be said for Australia’s economic community.

The market long-shot has been backed by plenty of well-known names, including from Australia’s largest bank.

According to a poll from Bloomberg, six of 27 economists are forecasting a 25 basis point rate cut, taking the cash rate to a fresh-record low of just 1.25%.

The Commonwealth Bank is one major name that believes there’ll be a cut, joined by the likes of Citibank, Market Economics, Morgans Financial, Societe Generale and St George Bank.

That’s in comparison with cash rate futures which currently put the odds of a rate cut at just 4%.

Looking further ahead, and diverging again from the view expressed by financial markets, a majority of economists see the cash rate being reduced further by the end of the June quarter next year.

Sixteen of 26 expect the cash rate to sit at 1.25% or lower with JP Morgan, Macquarie Research, Market Economics, Morgans Financial and St George Bank all forecasting that the cash rate will sit at just 1%.

There’s a lot of water to go under the bridge before then, but it’s clear that many don’t believe the RBA’s easing cycle is over.

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