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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."