Today’s interest rate decision too close to call

Today’s interest rate decision too close to call

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Experts are divided on whether the Reserve Bank of Australia will leave the cash rate on hold or move it to a record low setting.

According to a finder.com.au survey of 34 economists and commentators, 16 expect rates to fall, while 18 expect rates to remain at 2.25 per cent.

Bank of Sydney deputy chief executive Steven Pambris told finder.com.au the Reserve Bank would leave rates on hold so it can see what measures the federal government implements in this month’s Budget.

Heritage Bank chief treasury officer Paul Williams also predicts rates will remain on hold: “The Reserve Bank retains a bias to ease, but appears conscious they have limited monetary policy ammunition left, therefore they are being extremely cautious.”

AMP Capital chief economist Shane Oliver told finder.com.au a cut is coming and will probably happen today.

“Growth is sub-par, the business investment outlook is weak, the Australian dollar is still too high and inflation is benign,” Mr Oliver said.

Rate cuts have also been forecast by CommSec economist Savanth Sebastian and BetaShares chief economist David Bassanese, with the former pointing to weak non-mining business investment and the latter highlighting a firm Australian dollar and weak iron prices.

According to the survey, 21 of the 34 respondents expect the Reserve Bank to make at least one more rate reduction this year, while six have forecast two cuts.

[Related: Big four banks divided on possible rate cut]

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