Cash rate to remain on ice, for now

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The cash rate is expected to stay on hold when the Reserve Bank of Australia (RBA) meets for its first monetary policy board meeting for 2016 today.

All 29 economists and analysts in’s monthly Reserve Bank survey expect the cash rate to remain on hold at 2% this afternoon. More than half (56%) also agree that the central is unlikely to cut rates any further this year.

AMP chief economist Shane Oliver said recent economic data hasn’t been positive, but it isn’t enough for the RBA to add further monetary policy stimuls.  

“I think that given the emerging softening in the housing cycle, the ongoing mining downturn and renewed global market turmoil that the risks to growth are on the downside and given very low inflation the RBA should ease again. But I don't think it's convinced just yet.”

The chief economist for the Commonwealth Bank of Australia (RBA) agrees, adding that the lower Australian dollar will ward off the need for additional stimulus at this point.

With another cash rate cut unlikely, the survey suggests the next move for the cash rate will be an upwards one. In fact, one in three (34%) expect the cash rate to be hiked in 2016. However, it is more likely to rise in 2017, with more than half (52%) predicting a rate rise next year.