Cash rate likely to remain steady

The 31 respondents who believe the rate will remain on hold cited a need for the RBA to continue to assess the impact of the last two rate cuts in February and May.

In addition, many believe an improving labour market and a lower Australian dollar are factors that may contribute to the decision to keep rates on hold.

“The Reserve Bank is confident that the economy’s transition away from dependence on mining investment is underway,” AAP chief economist Garry Shilson-Josling said.

“It’s also formed a tentative view that slower population growth, thanks to low immigration levels, means less economic growth is needed to stop unemployment from rising, so there’s no need for more cuts right now.”

However, Griffith University associate professor Mark Brimble believes the cash rate will fall today because the RBA wants to further stimulate the Australian economy.

“The economy remains weak with low confidence, low investment, weakness in key trading partners and deteriorating equity markets with a less than pleasing reporting season,” he said.

“These factors, together with the move by China to weaken its currency and APRA’s interventions in the credit markets provide scope for the Reserve Bank to cut rates to give the economy the stimulus it needs.”

Seventy-eight per cent of experts do not expect the cash rate to move again this year, while 16 per cent believe it will be cut by the end of the year.

Over half (53 per cent) of the experts expect the cash rate to begin to rise in 2016 – with the fourth quarter of the year tipped to be the most likely period for this to happen – while 44 per cent believe that while a cash rate rise is on the cards, it is likely to occur beyond 2016.

[Related: Industry figures respond to cash rate decision]