Will the RBA cut rates in June?

Mozo

Tuesday 04 June 2013

Although leading economists are tipping at least 2 or 3 more rate cuts this year and are banking on an already record low interest rate of 2.75 percent to be hacked to as low as 2 percent, most agree that it will not likely happen tomorrow at the RBA's June meeting.

Those who are hoping for another rate cut tomorrow can hold their grudge against the Aussie dollar. While travellers have praised great exchange rates, local businesses with exporting and overseas interests have been doing it tough with an overvalued Australian dollar.

After the RBA knocked 25 basis points off the cash rate in May, the Australian dollar almost immediately fell below parity against the US dollar and has declined almost 7% since.

According to HSBC chief economist Paul Bloxham this would equal a contribution of almost 1% to the countries GDP and thus easing the pressure on the RBA to cut rates again in June.

But the main issues for the Australian economy still stand. The mining sector is not about to come to a complete stand still but is definitely slowing down and other sectors such as housing will need to fill the void. This along with a number of global economic challenges has economists predicting that further cuts are likely, just not this month.

But economists and experts predictions have been wrong before and its not over until the RBA sings, so whatever happens tomorrow be sure to check back here when Mozo's rate chasers bring you up to speed on the bank's announcements and all the action.

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