Although the plunge in real private capital expenditure in the first quarter has led us to revise down our estimate for first-quarter GDP growth, from 0.8% q/q to 0.6%, the survey probably isn’t weak enough to prompt the RBA to follow the rate cut to 1.75% in May with another cut as soon as June. But it does support our view that rates will soon be reduced to 1.50% and that they will remain low for a couple of years.
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