RBA to reduce interest rates in June?

The Reserve Bank of Australia (RBA) may start to cut interest rates in June, an expert has suggested.

Malcolm Wood, investment strategy head for Morgan Stanley Smith Barney, said the rate could drop by between 25 and 50 basis points by this time, reports the Advertiser.

He noted the economy appears strong because of the boom in the mining sector, but claimed this is not reflected throughout the country.

Indeed, Mr Wood suggested that many are suffering from the poor housing approval figures and "sluggish" credit growth.

Consequently, he went against the forecasts of many other analysts, who have indicated that the RBA will raise rates during 2011.

At the moment, interest rates in the country are set at 4.75 per cent.

This comes after the Australian Bureau of Statistics revealed that its latest consumer price index will provide a more accurate reflection of average household expenditure, which will mean this could impact more heavily on interest rate decisions, the Australian reported.

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