The economic growth forecast for Australia has been heavily reduced, increasing the likelihood of an imminent interest rate cut.
Thanks to increasing uncertainty coming from international trade wars, the Organisation for Economic Cooperation and Development has cut the nation’s growth forecast to 1.7 per cent.
Amid the pessimism, the big four banks are now all predicting the Reserve Bank will cut rates below the 1 per cent mark on October 1.
The OECD has mirrored the RBA’s call for government to do more to support the economy fiscally.
“Economic prospects are weakening for both advanced and emerging economies, and global growth could get stuck at persistently low levels without firm policy from governments,” they said in a statement.
“Escalating trade conflicts are taking an increasing toll on confidence and investment, adding to policy uncertainty, aggravating risks in financial markets and endangering already weak growth prospects worldwide.”
On a global scale, the OECD has tipped economic growth to slide to 2.9 per cent this year, down from the 3.6 per cent recorded last year.
Adding more pressure on the RBA to cut rates next month was a slight rise in the national unemployment rate announced last week, and it is becoming hard to see them not acting when they next meet.