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Analysts at UBS believe the ongoing Australian economic slowdown has caught the Reserve Bank of Australia (RBA) by surprise and the central bank will likely cut rates by 25 basis points to a new record low 0.75% next week.

The big four Australian banks – the National Bank of Australia, Commonwealth Bank, Westpac, and the Australia New Zealand Bank –  also expect the bank to cut rates on Oct. 1 and deliver another rate cut in February.

Key quotes (UBS)

Lower rates would put downward pressure on the AUD.

RBA thinks the unconventional monetary policy is “unlikely”.

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 extremes, unconventional policy measures would need to be on the table.