Are interest rate cuts contagious? This time they might be.
A shock rate cut from the Bank of Canada overnight has added to calls for the Reserve Bank to do the same next month - with one economist calling Australia's interest rate levels "absurd".
Canada cut its benchmark interest rate a quarter of a percentage point to 0.75 per cent in response to low oil prices and concerns about weak inflation.
The decision, which followed similar moves from a string of central banks in the past week, reverberated around global markets and saw the Australian dollar fall below 81 US cents as futures markets doubled the odds of a February rate cut here.
Economists, however, are divided over where the RBA should go from here.
Market Economics managing director Stephen Koukoulas said the RBA should take a page out of the Bank of Canada's book and cut at the next available opportunity, it's February 3 board meeting.
"I wouldn't say it's urgent but if they don't cut in February I don't know what's going on with them," he said.
"It's just absurd and the RBA can't let it stand."
Mr Koukoulas' comments come a day after Westpac chief economist Bill Evans called on the RBA to cut in February, given the weak outlook for inflation.
On the other side of the fence is HSBC chief economist Paul Bloxham, who doesn't expect the RBA to cut at all and is betting on a rate hike by the end of the year.
He says Canada, which is a major oil exporter, is in a fundamentally different position to Australia.
"For Australia, the impact of lower oil prices is net positive, we are a net petroleum importer."
But Australia's economy has been hit by weakness in other commodities - especially iron ore and coal, which arguably puts it in a similar position to Canada.
Meanwhile, low inflation, and the threat of deflation, is a growing concern around the world, with Canada just the latest in a string of central banks to cut rates.
So economists and investors will be closely watching the release of official inflation figures for the December quarter next week.
Most economists are currently tipping the Australian Bureau of Statistics figures will show annual inflation running at below two per cent, with underlying inflation at the lower end of the RBA's two-to-three per cent range.
So, Mr Koukoulas argues, the inflation outlook may not only give the RBA room to cut, but a reason to.
"Inflation is simply too low, unemployment is too high, interest rates are way too high, we've just got to cut them," he said.
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