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REPEAT: MNI POLICY: RBA Prepared To Cut Rates Again: Gov Lowe

MNI (London)
By Lachlan Colquhoun 
     SYDNEY (MNI) - The Reserve Bank of Australia remains willing to cut
official interest rates further if the situation warrants, Governor Philip Lowe
said Tuesday.
     Lowe, speaking ahead of a policy meeting next Tuesday, said that the Board
would "again take stock of the evidence" when it meets to make its decision on
interest rates, although he did not specifically say the Bank would cut next
week.
     "Further monetary easing may well be required," Lowe told the Armidale
Business Chamber.
     "While we are at a gentle turning point and expect growth to pick up, the
strength and durability of this pick up remains to be seen."
     The RBA cut official rates by 25 basis points in June and again in July,
bringing them down to a record low of 1%.
     The market is pricing in one, and perhaps two more similar sized cuts by
mid-next year, with many analysts forecasting a cut next week.
--EXTENDED PERIOD
     In his speech, Lowe repeated the RBA view that an "extended period of low
interest rates will be required" in Australia to make progress in reducing
unemployment and achieving progress towards the inflation target.
     Unemployment rose last week to 5.3%, even though employment grew by more
than 30,000, while inflation is at 1.6% against a target of between 2% and 3%.
     Much of Lowe's speech in Armidale repeated his recent comments and those in
the RBA's September Statement on Monetary Policy, but for the first time he
spoke of what he said were signs of a "gentle" economic recovery attributed to
the impact of lower rates, a stabilised housing market, and infrastructure
spending.
     "Looking forward, there are some signs that, after a soft patch, the
economy has reached a gentle turning point," he said.
     "This is evident in the fact that GDP growth over the first half of this
year was stronger than it was over the second half of last year.
     "We are expecting a further modest pick-up in the quarters ahead."
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MMLRB$,M$A$$$,M$L$$$]

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