Yesterday, Australia got a long overdue official wake up call, with the nation’s GDP declining by 0.5% in the September quarter. What is truly astonishing in light of the weakness we are seeing across the economy right now is how ‘hawkish’ the market is regarding interest rates, with many commentators still clinging to the belief that the RBA is done cutting, and that the current cash rate of 1.50% represents the low for the cycle. We think the market is as wrong now as it was a few years ago, when a market survey in late 2014 by Bloomberg found that 23 out of 23 economists thought 2.5% would be the low in the RBA cash rate, as per the image below. Rates have of course been cut a further four times since, and in our opinion, they have a lot lower to go.