The Reserve Bank is expected to look through recent market turmoil and keep the cash rate unchanged for the foreseeable future. All 16 economists surveyed by AAP expect the RBA to keep the cash rate unchanged at its September meeting on Tuesday, and only three expect another cut before the middle of next year.
The central bank cut its interest rate by a quarter of a percentage point in February and again in May, taking the cash rate to a new record low of 2 per cent. Early last week, the Chinese sharemarket suffered falls of seven and eight per cent on the back of concerns about its economy, which sparked losses in markets around the world.
The futures market responded by betting on an increased chance of an RBA cash rate cut, with pricing for a September reduction going as high as 16 per cent from 6 per cent last week. Despite this, JP Morgan Australia chief economist Stephen Walters doubts the RBA’s interest rate stance has changed much since the August meeting.