The official cash rate will touch 0.5 per cent midway through next year because the Reserve Bank will have to capitulate to a much more severe global economic downturn, according to JP Morgan economists.
With financial markets already pricing in a 0.25 percentage point rate cut on Tuesday and another two 0.25 percentage point rate cuts by the start of next year, JP Morgan suggests the RBA will have to go even harder.
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Matthew Cranston is the United States correspondent, based in Washington. He was previously the Economics correspondent and Property editor. Connect with Matthew on Twitter. Email Matthew at mcranston@afr.com
