Macquarie Group analysts believe that three more rate cuts from the Reserve Bank are on the line before the current easing cycle ends. One more rate cut is possible this August, and the next two will likely be in May and August 2017 when the rate cut would likely be below one per cent.

“We think that the RBA have to cut the cash rate further to at least one per cent, and have further delayed the timing of expected policy normalisation,” the group said in a note to clients last week. “With little to differentiate Australia from other advanced economies, the risk lies with a slow and persistent grind to even lower rates.”

Apart from lowering its cash rate expectation to one per cent and its nominal 10-year bond yield forecast to below two per cent, Macquarie Securities also lowered its year-end target on the ASX to 5700 because of its disappointing earnings expectations for 2016. It also believes that the local currency will round off the year at around US67c.

JPMorgan issued a similar statement last week, with its one per cent rate forecast at the low end of the range among all other analysts.