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RBA Watchers Divided Over Unconventional Policy in Australia

  • All but four expect RBA to reach 0.25%, lower bound of policy
  • All economists agree budget should be tapped to support growth
Pedestrians walk past the Reserve Bank of Australia (RBA) headquarters in Sydney.
Pedestrians walk past the Reserve Bank of Australia (RBA) headquarters in Sydney.Photographer: Brendon Thorne/Bloomberg

Economists are divided over the likelihood of the Reserve Bank of Australia deploying unorthodox policy next year once it runs out of conventional ammunition -- though a majority expect it will exhaust interest-rate cuts.

Thirteen of the 17 economists in a Bloomberg survey expect the RBA to cut the policy rate twice to 0.25%, the level Governor Philip Lowe estimates as the effective lower bound when unconventional steps become an option. The remaining four predict one more cut to 0.5%.