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The Reserve Bank of Australia has announced its decision on the official interest rate this month, following predictions of a potential cut to rates.
Despite speculation of a cut to the official interest rate this month, the RBA has decided to keep the official interest rate on hold at 0.25 per cent.
Prior to the rate announcement, My Housing Market chief economist Andrew Wilson predicted that the RBA would decide to cut the interest rate ahead of what is likely to be unprecedented fiscal stimulation announced in the budget tonight.
Mr Wilson said this would allow for “a two-pronged attack to restore the economy to growth”.
Bendigo head of economic and market research David correctly predicted that rates would remain on hold this month.
“The RBA appears ready to add further monetary support by cutting the official cash rate to 0.1 per cent although they will probably wait until Cup Day rather than federal budget day,” Mr Robertson explained.
“Fiscal support will be more critical and effective than monetary, but the RBA [is] playing their part, including via more QE.”
IFM Investors chief economist Alex Joiner said that while the RBA has been signaling that it is considering easing policy further in the near term, “on balance it will likely wait until after the budget to do this”.
“It will be hoping that the fiscal largess that is expected will be enough to prevent it from having to do anything,” he said.
Budget is defined as the estimation of expenses made over a specified time for the purchase of goods or services.