TWEET TALK: November preference

Economists are split between those expecting the Reserve Bank to cut the cash rate today and those banking on a November move.

The Reserve Bank of Australia meets today to discuss the future of the official cash rate. Last month, the central bank held rates steady at 3.5 per cent for the third consecutive month after cutting them by 25 basis points in June and 50 basis points in May. Economists are expecting one or more rate cuts by December but only a handful are picking the board to move today.

Chief market analyst at City Index Asia Pacific Peter Esho ‏(@PeterEsho) said there were plenty of reasons for an interest rate cut.

"Rapid decline in govt spending, falling commodity prices, project pipeline deferrals, high currency, weak spending (all) reasons for #RBA cut," he tweeted.

AMP Capital head of investment strategy and chief economist Shane Oliver (@ShaneOliverAMP) agreed the time was ripe to move again.

"I expect RBA to cut. There is an urgent need to boost non-mining economy in face of mining slowdown, strong Australian dollar and fiscal cuts," he said.

However, Commsec chief economist Craig James (@craigjamesOZ) predicted the RBA would hold fire.

"RBA doesn't need to rush with rate cut. Housing market improving with RP Data-Rismark daily index posting a solid 1.4% rise in September," he tweeted.

Ben Le Brun, market analyst with optionsXpress ‏(@benlebrun), also predicted a hold.

"On hold. A more dovish statement to accompany. Maybe cut by 50 on cup day if things sour further," he wrote.

"I don't think the RBA will cut in October, but can't rule it out. More likely a rate cut in November."

Treasury dealer at Arab Bank Australia David Scutt (@David_Scutt) said the RBA would wait until next month.

"Since the #RBA last met. Iron Ore 20%. Copper 8.7%. #AUDUSD 1.3%. #ASX200 2%. Unemployment -0.1ppts. #China #PMI 0.6ppts #ausbiz, " he tweeted.

"While there were subdued job ads, credit, #PMI & building approvals data, with housing and employment holding up, #RBA on hold today.

"If the #RBA doesn't move, we suspect they'll point to an easing in Nov if CPI prints benign (as they did in April)."

But Market Economics managing director and Business Spectator contributor Stephen Koukoulas ‏(@TheKouk) said there was no doubt the RBA should cut.

"There is no doubt they should cut and signal more to come ," he said.

Meanwhile, Eureka Report investment strategist Adam Carr (@AdamCarrEcon) said there was no case to justify a move.

"They should keep rates steady as there is clearly no case for a cut," he said.

"Goals of monetary policy are per RBA Act. Currency stability – tick. Full employ – tick. and eco prosperity – tick. No case for rate cuts.

"The pressure to cut is huge though, so it's a good chance."



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