The Reserve Bank of Australia kept its official cash rate unchanged at 2.5% yesterday but analysts believe the key interest rate will be cut to a record low of 2% next year.
The cash rate has been at 2.5% since August last year.
RBA governor Glenn Stevens said growth in the global economy was continuing at a moderate pace.
China's growth had generally been in line with policymakers' objectives.
''While weakening property markets present a challenge in the near term, economic policies have been responding in a way that should support growth.''
The United States economy continued to strengthen, but the euro zone and Japan had both seen weakness recently, he said.
Some key commodity prices had declined significantly in recent months, reflecting somewhat softer demand and, more importantly, increased supply.
Deutsche Bank chief economist Adam Boyton said the RBA would cut the cash rate to a new low of 2.25% towards the end of the June quarter next year before reducing it to 2% in September or October.
The New Zealand Reserve Bank is likely to keep its OCR unchanged next week at 3.5%.
Mr Boyton said the Australian economy was unlikely to get better over the next year or two than it had been over the past two years.
''It's just that combination of some early signs of cooling in-house price growth, weaker commodity prices over the past few months, combined with our expectation the unemployment rate will rise to close to 7% next year.
''All of those things mean that on balance, we think rate cuts next year are more likely than not,'' he said.
Mr Stevens said global financial conditions remained ''very accommodative'' and long-term interest rates and risk spreads remained low.
Differences in monetary policies across the large jurisdictions were affecting markets, particularly exchange rates.
In Australia, most data was consistent with moderate growth in the economy.
Resources sector investment spending was starting to decline significantly, while some other areas of private demand were seeing expansion, at varying rates.
Public spending was scheduled to be subdued.
''Overall, the bank still expects growth to be a little below trend for the next several quarters.''
Looking ahead, continued accommodative monetary policy should provide support to demand and help growth to strengthen over time, Mr Stevens said.
Inflation was expected to be consistent with the 2%-3% target over the next two years.
On present indications, the most prudent course was likely to be a period of stability in interest rates.
Deutsche Bank was the latest international firm to forecast rate cuts in 2015.
Last month, Steen Jakobsen, chief economist at Denmark-based Saxo Bank, told AAP the cash rate would need to be cut to 2% but possibly as low as 1.5%, as Australia moved into recession.
But the majority of economists still thought the RBA's next move would be a rate hike either next year or in 2016, according to a recent AAP survey.
