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Rates to stay on hold

The Reserve Bank will not be cutting the official cash rate - at least until next year.

All 13 economists surveyed by AAP expect the RBA to keep the cash rate at two per cent at its December meeting today, but six are predicting that there will be a cut early in 2016.

In a speech last week, RBA governor Glenn Stevens indicated that he is still prepared to reduce the cash rate again, if needed, after cutting it in February and May.

"I'm more than content to lower it if that actually helps, but is that the best thing to do at a particular time?" Mr Stevens told an Australian Business Economists (ABE) dinner.

"As for February, that's three months away, we've got Christmas, we should just chill out and see what the (economic) data says."

Recent good economic data, including the unemployment rate falling to a six-month low, has caused the chances of another interest rate cut this month to diminish. This is though offset with other financial indicators that suggest the economy is still running below par.

One thing we are confident of this the fact that the RBA does not want to cut further at this time as it would have already done so. We still believe there a good chance of a further rate cut in February 2016. With the major banks lifting their standard variable rates out of cycle recently, we are certain that the RBA after waiting to look and see will need to cut rates by 25 basis points to restore the status quo of its monetary policy position.

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