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RBA to hold rates at 1.75% next week

Twelve of the 14 economists surveyed by AAP forecast rates to be held at all-time low of 1.75 per cent next Tuesday.

The Reserve Bank is likely to keep rates on hold until it gets another read on inflation in late July.

Twelve of the 14 economists surveyed by AAP expect the cash rate to be held at its all-time low of 1.75 per cent when the board of the central bank meets on Tuesday.

Markets are even more definite, pricing the chance of no move by the RBA at 95 per cent.

The RBA's key consideration remains inflation, after an unexpected fall in consumer prices in the March quarter triggered its quarter of a percantage point rate cut in May.

There's been mixed economic data since, with better than expected quarterly economic growth of 1.1 per cent undermined by continued weakness in domestic demand - the total amount of spending in the economy.

The unemployment has also held steady at 5.7 per cent.

HSBC senior economist Paul Bloxham said RBA's outlook for low inflation is unlikely to have changed since its May decision.

"Although inflation is too low, and the case could be made for a further cut, an immediate cut seems unlikely," he said.

"Keep in mind that the RBA has a flexible inflation targeting regime, which allows the CPI to be outside the band for periods of time, without requiring an immediate response."

Most economists expect the RBA to cut again at its August 2 board meeting, after the release of June quarter inflation numbers.

RBC Capital Markets head of economics Su-Lin Ong said the latest retail trade figures, which showed weaker than expected growth in spending, confirmed a tepid pace of consumer demand, which she expects will persist into 2017.

"This will likely support the RBA's easing bias beyond the next 25 basis point cut," she said.

ECONOMISTS TIPPING NO RATE MOVE IN JUNE

AAP

AMP Capital

ANZ

BlackRock

Commonwealth Bank

HSBC

JP Morgan

NAB

St George

TD Securities

Westpac

ECONOMISTS TIPPING 25BP RATE CUT

RBC Capital

UBS

Source: AAP survey


2 min read

Published

Source: AAP



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