Mixed feelings on RBA rate decision

THE Reserve Bank will meet on Tuesday to determine whether or not an interest rate cut was needed, after Treasurer Wayne Swan wrote lower rates were a "dividend" of the government's fiscal discipline.

While the RBA cut interest rates twice this year, by a total of 75 basis points in May and June to 3.5%, some economists were tipping a further cut when the board meets on Tuesday.

Mr Swan wrote in his weekly economic note any rate cut would be further evidence of "this government's continued disciplined approach to budget management", despite the minor effects the government's budget has on the wider economy.

A range of economists were tipping either a minor cut of 25 basis points, or a "hold decision" on Monday, while groups including the construction union were calling for a cut to help drive the building sector.

Property researchers RP Data has warned not to expect an interest rate cut from the Reserve Bank when it meets on Tuesday.



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