Will the RBA cut rates next week?

The experts are divided as to whether the RBA will cut rates when they meet in July.

Business Insider Australia are saying that(due to the Brexit) “As a result of the market carnage, on a scale not seen since the global financial crisis, financial markets now see it as a certainty that the Reserve Bank of Australia (RBA) will cut rates again, and perhaps more than once.”

And they say that banks like ANZ believe the UK Brexit will place additional pressure on the RBA to act.

But Mark Mulligan from SMH.com.au says “Global markets are braced for further volatility this week, but the direct impact on Australia of Britain’s decision to exit the European Union should not go too far beyond the hit to investor sentiment for now, say economists.” And he further points out that, with relatively light export flows to Britain and the European Union, Australia’s main concern at the moment is the hit to corporate, consumer and investor confidence as the world digests the ramifications of Brexit.

So possibly the RBA won’t cut rates after all, leaving economists betting that if they do cut the cash rate again it will be because of stubbornly low inflation, which will be more likely to occur at the August board meeting.

We’ll have to wait for next Tuesday at 2.30pm to know for sure.

 

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