NAB and Westpac disagree on future of the cash rate

Experts at two major banks have unveiled different forecasts regarding future changes to the cash rate by the Reserve Bank of Australia (RBA).

Following the publication of the latest Westpac Melbourne Institute Index of Consumer Sentiment, the financial institution's chief economist Bill Evans reiterated his expectation that rates will be cut by the end of the year, suggesting that they will fall by 25 basis points.

He stated that the move away from a rate increase has boosted confidence levels, although he suggested that it would not be enough to restore normalcy.

However, an expert at the National Australia Bank (NAB) asserted that the central bank is likely to keep rates on hold until November 2012.

Chief economist Alan Oster said: "NAB anticipates a long period of inaction by the RBA, before increasing rates to five per cent in November 2012."

He suggested that there would only be a reduction in the cash rate if unemployment breaks the 5.5 per cent barrier.

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