VIEW: Barclays noted that "the RBA Governor's...>

RBA: VIEW: Barclays noted that "the RBA Governor's messaging in recent days

appears more dovish than we had exp. While there has been little in the data to

suggest a faster-than-exp. deterioration in activity, the communication from

Lowe in recent speeches has been explicit about the fact that it is "more likely

than not that a further easing in monpol would be appropriate". The market is

pricing in roughly 75% prob. of a cut in July; this is more aggressive than the

RBA's technical assumption for its May '19 SoMP, which priced in cuts in Aug '19

& early '20. The governor has also mentioned that the June decision was not in

response to the RBA's May econ outlook deteriorating, but because the board

judged it could do "better than the path we looked to be on". A rate cut next

week would give the RBA the ability to influence the mkt implied cash rate,

which will be assumed as the future rate path in deciding the Bank's econ

forecasts in the Aug SoMP. As such, while our earlier call for a cut in Aug had

baked in the exp. of a downgrade to the macroecono assessment, we see no point

in the RBA waiting another month. We therefore bring forward our rate cut

forecast & see the RBA as likely to cut by 25bp at its 2 July meeting."