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RBA Reveals February Cash Rate Call

By Ray White Whitsunday

The Reserve Bank of Australia (RBA) has announced its decision on the official cash rate for February amid speculation the central bank will hold rates.

Following today’s announcement the official cash rate is 0.75, with the board deciding to hold interest rates for the time being.

Top market and economic experts were not surprised by today’s announcement, although they believe further easing is coming.

In the lead up to today’s decision, comparison site Finder had surveyed 39 of the nation’s leading economists and commentators, and found a majority expecting a rate cut by May this year.

Nicholas Gruen, Lateral Economics said “I expect the bank will hold. With latest employment data it is unlikely to cut. But I expect growth to continue sluggishly so there may be a cut or two down the track.”

Highlighting stronger labour data Sarah Hunter, BIS Oxford Economics believed the central banks would hold off cutting till later in the year.

“The recent labour market data has been more positive than we anticipated, so we’ve pushed back our call for one final rate cut to Q2 2020.

“But the forward indicators for jobs growth have continued to weaken (and the impact of the bushfires is a further downside risk), which means we still expect the RBA to cut one more time in this loosening cycle,” she said.

If rates are cut before May the official cash rate will be just one cut from the point where the RBA would consider instituting a quantitative easing program.

Source: Smart Property Investment.

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