UBS argue the economic slowdown came as a surprise for the RBA.

(I'll just add … given the forecasts made by the Reserve Bank of Australia over the past years, yes indeed they did not. OK, back to UBS)

  • RBA did not expect the slow down
  • rate cut coming at the next meeting, October 1

(UBS have been in the Oct. rate cut camp for some time)

More from UBS on the RBA:

  • RBA thinks unconventional monetary policy is "unlikely"
  • But "If growth failed to pick up, and the unemployment rate started rising noticeably, then all arms of public policy would need to address how to combat that... in extremis, unconventional policy measures would need to be on the table."

For the AUD:

  • Lower rates would put downward pressure on the AUD