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RBA to make second rate cut, say experts

This Tuesday is Melbourne Cup day, but the real punters will be watching the Reserve Bank of Australia that afternoon, as experts tip that the RBA board will announce a second rate cut for 2020, at the final meeting of the year.

In the Finder RBA Cash Rate Survey, 29 of the 43 experts and economists predicted a rate cut announcement next week.

Twenty-two of these expect a drop to 0.10 per cent (from the current rate of 0.25) is most likely, while five experts tip a smaller drop of 10 base points, to 0.15 per cent.

Graham Cooke, insights manager at Finder, said that this move would have been seen as unprecedented only a few months ago.

“The cash rate has already dropped 125 basis points in the last two years, so a further 10-15 point cut is unlikely to have much of an impact on the economy,” Mr Cooke said.

“Our experts seem to think that the RBA is in ‘every little bit helps’ mode,” he explained.

“The Reserve Bank said earlier in the year that it was considering 0.25 per cent as an effective rock-bottom, so a cut of any sort is a reflection of the grim economic situation,” he said.

Mr Cooke, however, disagrees with the experts.

“My hunch, despite economist’s predictions, is that the tone of the recent comments from the Deputy Governor indicate that a November cut is actually unlikely.

“Keep an eye on the ASX 200, however – any significant slide today or on Monday could spook the board into a Melbourne Cup day cut.”

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