The central bank is unlikely to give markets, the economy and perhaps Prime Minister Kevin Rudd a boost by cutting its benchmark cash rate tomorrow, says Paul Brennan. The cash rate is currently at 2.75 per cent.
“The return to the prime ministership of Kevin Rudd and new questions about the actual timing of the election has very little bearing on the near-term path of monetary policy,” says Citigroup's Australian economist.
Brennan predicts a September 21 election date, about a week after former PM Julia Gillard’s preferred election date
The Citigroup analyst does expect the Reserve Bank of Australia, at its monetary policy meeting tomorrow, “to gently jawbone the currency lower”.
At 1618 AEST the Australian dollar was at US91.95 cents, down 13 per cent from its 52-week high on January 10 of $US1.0598. The Australian dollar has fallen 11 per cent since April 30 when it was trading as high as $US1.0371.