Tomorrow’s RBA rates decision has been the focus of market speculation over the past week, as rate increases by the major banks put pressure on the central bank to consider a further cut. However, BetaShares Chief Economist David Bassanese believes it’s a case of ‘if in doubt, do nothing’.

“With tentative signs of improvement in the local economy, the RBA should – and most likely will – hold fire at its policy meeting on Tuesday morning, allowing most investors to concentrate on Melbourne Cup festivities”, says Mr Bassanese.

However, Mr. Bassanese still expects the RBA to cut rates in the near future.

“The RBA will eventually need to cut the official cash rate to 1.5% by mid-2016, as the housing upturn wanes and the unemployment rate begins to rise again”, he says.

Source: BetaShares

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