The National Australia Bank (NAB) believes two more rate cuts over the course of the year could follow as the country’s economy appears to be “soft with little momentum and weak confidence”.
NAB’s monthly business survey for January revealed business conditions are “are increasingly below the long-run average, falling for the third consecutive month”.
Sales also "deteriorated considerably, profits eased and employment remained soft" in the month.
However, non-mining investments were “still reasonable”, NAB’s chief economist Alan Oster said. He added that “other industries' conditions were flat-to-lower in the month”.
"Confidence remains very weak in mining, consistent with lower commodity prices," Oster said.
The Reserve Bank of Australia announced the 2.25% rate cut last week, which prompted big and small lenders to pass on lowered interest rates.
NAB followed suit by slashing its standard variable rate for home loans by 0.25% to 5.63%, its lowest rate for 40 years.
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