RBA expected to leave rates on hold

Economists are predicting the Reserve Bank of Australia (RBA) will leave rates on hold for a third straight month, when the board meets Tuesday 7 July.

AMP Capital Investors senior economist Robert Cunneen said there was no need for the central bank to change rates, with recent economic data of improved consumer and business confidence suggesting the economy is slowly regaining ground.

The minutes of the RBA June board meeting said the economic outlook was for a “fairly gradual expansion getting underway later in the year.”

However, while the general consensus was that rates would not move this month, many economics are pointing to an increase in the cash rate in the December quarter.

Economists at Citi expect the RBA to raise the cash rate 25 basis points in the December quarter and by a further 50 basis points in the first three months of 2010.

An announcement is expected to be made on Tuesday 7 July at the board meeting.

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