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RBA: VIEW: Thursday saw TD Securities pencil "in cuts for July'19, Nov'19 and
May'20. Making inroads into cutting spare capacity is the major driver for RBA
cuts. While easing in July or August should not make much of a difference from a
monetary policy perspective, we note Gov Lowe did not push back on the 70%+ odds
for a July cut that prevailed in the run up to his speech last week. As such we
now expect the Bank to cut in July. Assuming the RBA eases in July, bringing
total cuts to 50bps so far this year, our base case is for the Bank to move to
the sidelines to assess post-election moves in the property market and await the
Government's fiscal package announcement. The risk is that the RBA may be
brought back to the easing table again before year end. We had noted the
Australian labour market outlook was looking increasingly bleaker, citing NAB's
Capacity Utilization index as a reliable lead indicator for where the
underutilisation rate is heading. It was why we were suggesting a RBA cut as
early as the May meeting was a possibility as early as March."