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RBA keeps interest rates on hold

The Reserve Bank of Australia has kept the cash rate on hold at 1.5 per cent.

Many market economists predicticted the RBA would hand down an interest rate cut.

They lowered their inflation forecasts from 2 per cent to 1.75 per cent.

Westpac Chief Economist Bill Evans tells Ross Greenwood he believes an inflation report in August will lead to a rate cut.

“I think we are starting to see evidence that the labour market is starting to soften… and I think eventually that will weigh on the overall labour market number.

“They’ll have no choice but to cut.”

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But, HSBC Chief Economist Paul Bloxham tells Ross Greenwood the RBA is being patient and will not deliver any further cuts.

“They think we’ll eventually get inflation back to their target… they think the economy is on the right path for delivering that pick-up in inflation.”

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