The economists expect the RBA to continue to ease policy, with the cash rate likely to reach 1 percent by the second quarter of 2017.
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Last month, the RBA cut the cash rate to a record low 1.75% after inflation data was “unexpectedly low”.
In this update: The Reserve Bank of Australia is meeting today and analysts are nearly unanimously predicting they will leave interest rates on hold at the historic low of 1.75%.
“The RBA were never going to cut the cash rate today, but there was always a strong possibility of a clearer easing bias in the last paragraph”, chief market strategist at IG Chris Weston said, referring to the bank’s monetary statement.
The report forced the RBA to downgrade its underlying inflation forecast to 1-2 percent for 2016, from a previous target of 2-3 percent.
“While the decision to hold rates was widely expected, the prospect of a further rate cut later this year is still well and truly on the cards”.
RBA governor Glenn Stevens said the economy had been growing at a slower than average pace and that inflation was expected to remain low for quite some time.
“We see the RBA on hold in June and July, and have a cut pencilled in for August, after the [second quarter consumer price index reading]”.
“Strong housing market conditions probably wouldn’t be enough to block a further rate cut, however, if the renewed growth trend continues”, he said.
Mr White said fixed rates were useful when planning for a family, during times of job insecurity or any other situation which might affect regular income. The usual complaints about the exchange rate remained in the same level of rhetoric despite the rise in the A$.
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“A key result of the more hawkish [Federal Reserve] has been a depreciation of the [Australian dollar], which has fallen from US$0.78 in mid-April to around US$0.72 recently”, Mr Bloxham said.
