Experts back Melbourne Cup day for next RBA rate cut
The central bank is widely tipped to cut interest rates again this year after the cash rate dropped for the third time on Tuesday to 3.60 per cent.
Tuesday's interest rate decision by the Reserve Bak board was unanimous and in line with previous comments where the central bank said future rate cuts were just about timing.
The cut is the third in the cycle, after rate cuts in February and May, and follows the bank's shock decision to keep the cash rate on hold in July.
Following the August rate cut, experts quickly forecast more interest rate relief, although the market is not banking on back-to-back rate cuts.
Betashare chief economist David Bassanese said more interest rate cuts were coming on quarterly data, with inflation falling towards the midpoint of the 2 to 3 per cent target.
'That said, barring a major growth scare, the RBA does not seem in any rush to cut interest rates,' Mr Bassanese said.
'All up, my base case remains that a rate cut on Melbourne Cup day is an odds-on favourite – following release of the June quarter consumer price index report in late October.
'If the CPI report confirms annual underlying inflation has fallen to at least 2.6 per cent (the RBA's current expectation) – as I expect – then I fully anticipate the RBA will cut rates to 3.35 per cent on Melbourne Cup Day, Tuesday November 4.'
AMP chief economist Shane Oliver said the RBA would continue to cut interest rates on the back of risks to higher unemployment and inflation subsiding.
'So, while low unemployment and poor productivity growth mean that the RBA will remain cautious and gradual in cutting rates, and they will assess the situation from meeting to meeting, we continue to see the RBA cutting rates again in November, February and May, taking the cash rate down to 2.85 per cent,' he said.
In her press conference post announcing a rate cut in August, RBA governor Michele Bullock confirmed that further interest rate cuts were coming but said the bank would remain data dependent.
'You'll note that in the forecasts, we have inflation coming back down to target, and the unemployment rate remaining where it is with a couple more cash rate cuts in there – that's the best sort of guess,' she said.
'But things can change, and the board has to be taking things meeting by meeting and absorbing the data and thinking about what that might mean for whether or not we're on track to achieve our goals.'
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