The Reserve Bank of Australia (RBA) holds its August policy meeting on Tuesday and is considered almost certain to cut rates a quarter point to 2.5 percent, bringing this easing cycle to 225 basis points spread over 21 months.
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Market rates have already baked in another move to 2.25 percent by Christmas and there's no hint of a tightening priced in for at least the next two years.
"2014 will be a long year for the economy and a cash rate even lower than our 2.25 percent forecast is now a distinct possibility," said Alan Oster, group chief economist at National Australia Bank.
That outlook has been clearly reflected in government bond yields, with the cost of borrowing out for one year hitting an all-time low of 2.24 percent on Monday. Even two- three- and four-year yields are under the cash rate.
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In large part, Australia is a victim of its own good fortune. Its embarrassment of natural resources were just what China needed to fuel its growth miracle leading to a truly massive boom in mining.
As a result, mining investment has quadrupled as a share of the economy but now looks to have peaked. Having risen so rapidly the risk is that spending could fall quite sharply from quarter to quarter, taking chunks out of economic growth.