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One of the nation's major banks believes if robust economic growth is to continue next year, further interest rate cuts are needed.
But Westpac chief economist Bill Evans also says the Reserve Bank of Australia (RBA) is clearly in "wait and see" mode, after an impressive surge in economic growth in the first three months of 2012.
"We believe that there is already a case for financial conditions to ease," he said on Wednesday after the release of the Westpac-Melbourne Institute leading index for economic activity.
The leading index shows the economy is set to grow at a below trend pace in the second half of 2012 and into 2013, albeit at an improved tempo than previously thought.
The index, which indicates the likely pace of economic activity in three to nine months time, was 2.4 per cent in June - its fastest pace since August last year, but below the long term trend of 2.7 per cent.
"Westpac anticipates that more robust growth outcomes for 2013 will require further interest rate relief," Mr Evans said.
The unemployment rate was set to rise, inflation was contained, the Australian dollar remained strong and the world economy was likely to remain quite threatening, he added.
"However, it will clearly take time to convince the board of our view," Mr Evans said, who doesn't expect another cut in the cash rate until the 2012 December quarter.
Another survey found most home buyers expect the central bank to cut rates again this year.
The online poll by mortgage provider Loan Market showed 64 per cent of the 865 respondents expect at one more reduction.
Breaking that down, 46 per cent expect a 25 basis point cut, 15 per cent see a 50 basis points reduction, while three per cent are hoping for at decrease of more than 100 basis points.
"Although many economic forecasts are tipping the RBA to stay on the sidelines, consumer sentiment is clearly in favour of further rate relief," Loan Market corporate spokesman Paul Smith.
Mr Smith said while the central bank had made 75 basis points worth of cuts over May and June, "a cloud remained over the housing and retail sectors".
RBA governor Glenn Stevens and his economic team will appear before the powerful house economics committee in Canberra on Friday, which will give him a chance to expand on its monetary policy views.
Based on information provided by and with the permission of the Western Australian Land Information Authority (2013) trading as Landgate.