The reluctance of businesses to borrow funds for growth makes another interest rate cut more likely, an economist says.
The Reserve Bank's February rate cut, which took the cash rate to a record low of 2.25 per cent, has done little to spur business borrowing, a survey by Dun & Bradstreet found.
Just 19 per cent of firms surveyed plan to borrow during the June quarter, compared with 18 per cent a year ago, and Dun & Bradstreet economic adviser Stephen Koukoulas said weak business confidence made another rate cut more likely.
"With expectations for a much needed, sustained upswing in business investment and employment having stalled, it is likely that the RBA will need to provide further monetary policy stimulus in the near term," said Mr Koukoulas, who is a former senior Treasury economist and economic adviser to former prime minister Julia Gillard.
Financial markets see a rate cut by the RBA on Tuesday as an even money chance.
One in five firms surveyed by Dun & Bradstreet regarded soft demand as their biggest obstacle to growth in 2015.
The poll of 800 business executives, taken during January and February, also found they were less upbeat about employment and profit growth, capital investment and selling prices for the June quarter.
Share
