Tuesday, October 4, 2011

Reserve Bank to leave rates steady at 4.75 percent - but for how long?

By Business editor Peter Ryan

Interest rates are almost certain to be left on hold when the board of the Reserve Bank meets this morning.

But given the growing fears of a global recession emanating from a Greek debt default and almost daily sharemarket plunges, the big question is "for how long?".

Some economists believe an interest rate cut is inevitable by the end of the year and money markets are factoring in a 25 percent chance of a 1.5 percentage point reduction in the cash rate over the next year.

However, in its September board minutes, the RBA said those forecasts might not be accurate for "technical reasons".

Here's my analysis from this morning's "AM", yesterday's edition of "The World Today" and ABC News Online.

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