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FXstreet.com (Barcelona) - David de Garis of National Australia Bank notes that after showing nascent signs that credit growth may have been stabilising in September, monthly credit growth limped back again in October.

He feels that the slowing was evident across the various categories of housing (0.3%/4.7% after 0.4%/4.7%), other personal credit (0.1%/-0.7% after 0.3%/-0.9%) and business credit (-0.3%/3.3% after 0.3%/3.7%) reportings. He writes, "It's hard to escape that conclusion that this coincident to lagging indicator of the economy is a further hint of continued deleveraging through this half and quite possibly what we have seen as a softer economy." While it is likely true that the further rate cute in mid year and October have seen a faster rate of loan repayments, there are also indications that demand for new finance remains moderate.

As a data point that indicates lower growth this half year, and consequentially a lower base of activity, de Garis believes that it can be added to the likes of yesterday's capital expenditure expectations downward revision which suggest monetary easing has more work to do to support the economic outlook. He finishes by writing, "In fact, we now expect a 25 bps cut to be agreed to by the RBA Board next week with the distinct potential for more for 2013 until there are clearer signs that interest-sensitive domestic demand is responding adequately to the cumulative effects of monetary easing."
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