As stated last month, there is an increasing risk that the global economy is about to peak. Though the US has recorded a high rate of 4.1% for GDP growth in Q2 2018, that appears due to front-loaded exports in anticipation of tariff hikes. Leading indicators from China, Japan and Europe suggest weakened growth. Macroprudential controls of the financial system are probably too tight in Australia and in many other financial centres, given the circumstances. We are already seeing major Australian banks cutting their variable and fixed mortgage rates, which is evidence that financial institutions have been unable to match the demand for credit. A housing price crash is an unacceptable risk for the macroeconomy. Lending for business investment needs further encouragement. Therefore the central bank should signal that there is unlikely to be a cash rate increase in 2019, and that the probability of a cut has significantly increased.