RBA to hold rates after election, Brexit

Uncertainty about a possible hung parliament and concerns about the Brexit vote have wiped out any chance of an interest rate cut this month.

The Reserve Bank is expected to cut interest rates today. Source: AAP

The Reserve Bank is set to hold rates steady amid uncertainty about the federal election result and the Brexit vote.

All 12 economists surveyed by AAP expect the cash rate to be held at an all-time low of 1.75 per cent when the central bank meets on Tuesday.

Markets are only a touch less certain, pricing the change of no move by the RBA at 86 per cent.

Most economists have long held the view the bank will wait until the June quarter inflation figures are known in early August before making a decision to move on rates.

The RBA last cut in May, citing weak inflation as the trigger.

But the uncertainty about a possible hung parliament in Canberra coupled with lingering concerns about the UK's vote to leave the EU have wiped out any chance of RBA action this month.

"We think the election result makes this even more likely, as the RBA would not want to add to the uncertain environment through its policy moves," HSBC chief economist Paul Bloxham said.

"Its own post-meeting statement may be even more terse than usual, as it seeks to remain as neutral as possible."

But RBC Capital Markets chief economist Su-Lin Ong said even if the coalition was returned with a wafer-thin majority or tried to negotiate each piece of legislation with cross-benchers, there was an increased risk of a deteriorating structural budget deficit.

"We suspect either outcome leaves the burden on the RBA to lend support to the economy and is broadly consistent with our expectations for further easing and a terminal cash rate of 1.25 per cent.

"Indeed, it probably adds some downside risk to this forecast."

ECONOMISTS' TIPS FOR INTEREST RATES IN JULY:

AAP - 1.75 per cent

AMP Capital - 1.75 per cent

ANZ - 1.75 per cent

Commonwealth Bank - 1.75 per cent

HSBC - 1.75 per cent

JP Morgan - 1.75 per cent

Macquarie Securities - 1.75 per cent

National Australia Bank - 1.75 per cent

UBS - 1.75 per cent

St George - 1.75 per cent

TD Securities - 1.75 per cent

Westpac - 1.75 per cent