RBA Governor Lowe has come out swinging today and has suggested the door is well and truly open to another rate cut.

Governor Lowe gave a speech entitled The Recovery from a Very Uneven Recession at Citi Australia and New Zealand Annual Investment Conference and outlined the thinking around further easing.

Lowe said:

“It is reasonable to expect that further monetary easing would get more traction than was the case earlier.”

“To the extent that an easing of monetary policy helps people get jobs it will help private sector balance sheets and lessen the number of problem loans. In so doing, it can reduce financial stability risks.”

“We will now be putting a greater weight on actual, not forecast, inflation in our decision-making,” he said. “We want to see more than just progress towards full employment.”

This has made it quite clear that the RBA will likely be looking at another rate cut which would most likely now occur at the November 3 meeting. That would take the cash rate from 0.25% to 0.1% and make it another record low level. This has been projected for a while now, dating back to when the deputy governor made some easing comments a few weeks ago.

The AUD/USD has already started moving and is down around -0.3% on the session so far. The big support level below is 0.7100 and that could well come under more pressure.

At the same time, we also saw the latest jobs data which indicated that the jobless rate jumped back up to 6.9% which was slightly better than expected. This is through a period where stimulus is getting wound back, much of which was focused on income support.

It’s hard to be too bullish at the moment and we must expect some more weakness in the AUD/USD in the coming 24 hours – although these cuts have been somewhat expected for a few weeks now as many of the major banks have outlined.