While much of the country will be engrossed in the Melbourne Cup, the Reserve Bank of Australia will be making its announcement for the November cash rate.
It is expected to leave the rate on hold at 1.5%, where it has stayed since August 2016.
While some analysts are predicting the next move could be a rate cut due to the housing downturn, this has been ruled out by experts, for November at least.
The RBA shadow board at the Australian National University (ANU) attached 53% confidence to a continued hold. The remaining 47% was attached to hike.
Chair of the shadow board, Dr Timo Henckel said with the country's growth rate still standing at 0.9% and unemployment down just slightly, there was no need for immediate action on rates.
He explained, “Australia’s growth rate still stands at 0.9 percent for the June quarter while CPI inflation remains at 2.1%, inside the Reserve Bank of Australia’s official target band of 2-3%. The official unemployment rate fell to 5%.”
He said that internationally, “there appears to be growing uncertainty about the health of the world economy, reflected in recent declines in stock markets worldwide, bond rallies and significant jumps in volatility measures like the VIX”.
Henckel said, “The distribution of the Shadow Board’s policy preferences has shifted in favour of holding the interest rate constant.
“The Shadow Board is 53% confident that keeping interest rates on hold is the appropriate policy, eight percentage points up from the previous month.
“It attaches zero probability that a rate cut is appropriate (unchanged) and a 47% probability (55% in October) that a rate rise, to 1.75% or higher, is appropriate.”
In the longer term, the Shadow RBA Board placed a 64% probability on the need for rates to increase in six months, down from 73% in October.
The probability that rates should remain at 1.5% in six months was 30%, up 7% from last month. The estimated need for rates to fall in six months rose to 6% from 4% in October.