Australia central bank cuts rates to record-matching lows
while some economists think a floor of 2 percent is not impossible.
"I think the RBA realises it needs to do more to boost the non-mining parts of the economy," said Shane Oliver, chief economist at AMP Capital Investors in Sydney.
"What it doesn't do is to offer much guidance as to the future, but my feeling is they still have to cut further. They will probably do 25 (bps cut) in February and then 25 in April."
One reason for that is the stubborn strength of the Australian dollar.
In the global financial crisis, the currency tumbled by 30 U.S. cents, giving a big boost to exports. This time foreign demand for Australia's triple-A rated debt has helped it stay solidly above parity.
China has also played a part by accepting more moderate growth at home and thus restraining demand for Australia's commodity exports, leading top miners such as Rio Tinto and BHP Billiton to announce a slowdown in future expansion plans and job cuts.
The Asian giant is Australia's biggest trade market and the single largest buyer of iron ore. It helped Australia avoid recession during the global crisis by unveiling a 4 trillion yuan ($635 billion) stimulus package that led to a wave of infrastructure development and demand for resources.
Australia's mining investment in the year to June 2013 is expected to total A$109 billion, or nearly 8 percent of GDP, way above the long-run average of 2 percent.
Even after Tuesday's cut,
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