HSBC: Reserve Bank will cut rate by 0.25 points

The Reserve Bank of Australia is expected to slash interest rates by 0.25 per cent this month, according to HSBC economist Paul Bloxham.

He claimed that cutting rates any further than this would unsettle the economy.

"We remain of the view that the RBA will only cut by 25 basis points this month," he proclaimed.

Adding: "Any more would 'frighten the horses'."

The Reserve Bank has been juggling a number of poor performance indicators over the last month and with the producer price index falling by 0.3 per cent, economists are starting to fear the worst.

Interest rates were last cut in December 2011, but a recent survey of 16 economists by the AAP found that all expect a cut this month and almost two-thirds think rates will be slashed again in June.

Whether any of the rate cut is passed on to home loan customers remains to be seen, with many economists thinking the big four banks are likely to hold their own rates.

Have a question about interest rates? Ask the money gurus at Mozo Answers.ADNFCR-1761-ID-801353304-ADNFCR