The Reserve Bank of Australia is expected to keep the official cash rate on hold at 4.25 per cent for the foreseeable future.
According to the latest ING DIRECT quarterly economic outlook report, Europe is beginning to stabilise, giving the RBA less reason to cut rates.
“In the absence of further destabilisation in Europe and the potential subsequent flow on effects to the domestic economy, the RBA will more than likely be on hold over the next few months,” the report read.
The report went on to speculate that the Reserve Bank may cut the cash rate once more mid-year, but then leave it alone after that.
“Over the second half of the year interest rates are expected to be unchanged, with the risk that as the global and domestic economies strengthen, markets may begin to incorporate higher interest rates into the outlook.”