'Close call', but no rate cut on the cards

The majority of economists say the RBA will maintain the cash rate at its current level following tomorrow's meeting, with one notable exception



Economists are banking on disappointment for homeowners hoping for a further cash rate cut following tomorrow’s RBA meeting, with the majority of experts expecting rates to stand at 3%.

A survey conducted by News Ltd of 15 economists found that all but one expect the cash rate to remain steady in February – and even NAB chief economist, Alan Oster, the only one tipping a rate cut this month, has admitted it’s a ‘line-ball call’.

AMP Capital Investors chief economist, Shane Oliver, also said a rate cut was a "close call", but predicted the RBA was likely to remain on the sidelines tomorrow. But Oliver contended the Reserve's easing cycle was not yet over.

"The case for further rate cuts remains strong and I continue to see more cuts in the months ahead," he said.

Oliver said factors dragging on the economy would see the Reserve Bank return to cutting rates over the course of the year.
"The mining investment boom is slowing rapidly and bank lending rates still look too high to drive a decent recovery in sectors of the economy like housing and retail at a time when the $A remains strong. Most economic indicators remain well below the average levels they normally attain this far into a interest rate easing cycle," Oliver said.


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