The Reserve Bank of Australia has flagged interest rates will likely be cut next month and placed pressure on the Morrison government to join in the heavy lifting by introducing structural reform and more spending on infrastructure.

On the same day the Australian Prudential Regulation Authority proposed removing the 7 per cent serviceability buffer on home loans to stimulate credit growth and ease the housing downturn, RBA governor Philip Lowe told the market that higher unemployment was now preventing inflation targets from being met and that interest rate cuts may be appropriate.