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More rate cuts to come: NAB

Suggestions the Australian economy is treading water have encouraged the National Australia Bank to revise its rate forecast to include another rate cut in February.

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Suggestions the Australian economy is treading water have encouraged the National Australia Bank to revise its rate forecast to include another rate cut in February.

According to NAB's latest Monthly Business Survey, business conditions softened in October, partly unwinding an improvement in conditions in the previous month.

Overall, activity was fairly mixed in the month, with the improvement in forward orders somewhat at odds with the fall in the stocks index and the decline in capacity utilisation.

From this data, NAB chief economist Alan Oster said he "tentatively expects another 25 basis point rate cut in February 2012".

"That said, we are generally more bullish on near-term growth than the RBA's latest forecasts; we see year-average growth of 2 per cent this year, around 4.25 per cent in 2012 and 3.25 per cent in 2013, but we have lower near-term inflation."

 


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