With the election settled and Labor’s extensive tax changes off the table, the risk of an asset-led recession has receded. Further to this, APRA (always in consultation with the RBA) has finally and belatedly responded to the macroprudential imperative and removed some of its onerous regulations on credit. Nevertheless, the economic war between the US and China is getting more intense, and looks as if it may persist into the long term and spread more widely. This is a major source of the weakening of global economic growth, which will keep real interest rates low. Australia is significantly exposed to these global headwinds. Inflation remains below the RBA target, output growth is below normal, and the underemployment gap is still high. The cash rate needs to be cut now and once again soon.