The Reserve Bank has no choice but to join the currency debasement contest that’s now going on around the world, and to cut rates by another 1% in the coming 12 months -- including 0.5% by the end of the year.

The Australian dollar is in a "no-lose" situation: when Western central banks launch asset-buying programs, as the central banks of the US, Europe, UK and Japan have all done lately, the "risk-on" environment sees the Aussie rise as a result of fund buying; but Australia’s AAA status and relatively high yield makes it a preferred safe haven as well, especially for other central banks.