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RBA set to cut rates

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The Adviser

Minutes from the Reserve Bank’s August monetary policy meeting and wages data released today point to a widely anticipated rate cut when the RBA meets next month.

Despite the risk of inflation, minutes from the bank’s meeting showed the risk of a “deeper and more persistent slowing” in the economy was providing a growing case for a reduction in the cash rate.

“Indeed less restrictive [financial] conditions could soon be called for, otherwise the risk of a deeper and more persistent slowing in the economy would increase,” the minutes said.

Elsewhere The Melbourne Institute’s Wages Report today also showed growth in total pay slowed to a rate of 4.9 per cent in August, from 7.5 per cent in the 12 months to May.

 
 

Edda Claus, a Melbourne Institute research fellow, said high energy and food prices were simply not feeding through to wages.

“This gives the RBA room for a loosening in monetary policy,” Dr Claus said.

The outcome of the Reserve Bank’s next meeting will be revealed on Tuesday 2 September.

Published: 19-08-08 

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Rate cuts on the cards: RBA; 05-08-08

By how much should rates be cut? Comment here

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