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RBA Under Pressure to  Cut Rates
World Economy

RBA Under Pressure to Cut Rates

A faltering economic recovery in the US is set to place further pressure on the Reserve Bank of Australia to cut interest rates when it meets on Tuesday, amid a fresh pulse of global monetary easing that is forcing up the exchange rate and inflating asset prices, ABC reported. On Friday, data showed that the US economy had expanded at a significantly slower pace than expected in the first half of 2016, with the 1.2% GDP growth rate well shy of the 2.5% consensus forecast, slashing the odds of a Federal Reserve rate hike before the end of the year. As traders cut the odds of a US rate hike, the Australian dollar gained almost US1¢ against the US dollar, changing hands at just shy of US76¢ late on Friday. As of Friday the market has assigned a better than 50% chance of the RBA cutting the cash rate to 1.50%, with 20 out of 25 economists surveyed by Bloomberg expecting a cut in the cash rate following last week’s subdued inflation data. 

 

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