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RBA expected to cut interest rates next month

Economists have predicted the Reserve Bank of Australia (RBA) will cut interest rates in May after record low inflation rates.

Inflation rates are at 1.4 per cent for the year, placing it lower than the RBA’s target of 2-3 per cent.

The RBA listed low inflation and unemployment as conditions for cutting interest rates.

ANZ’s head of Australian Economics David Plank tells Ross Greenwood the RBA should not be influenced by the timing of the election.

“If their forecasts basically set the case strongly for a rate cut, and then if they don’t cut interest rates, in many ways I think that would be more of a political act.

“They would be accused of not doing their job.”

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TD Securities Chief Economist Annette Beacher tells Ross the RBA has already set the foundation for rate cuts.

“If the RBA is seen to be missing or not missing its inflation target it will move if necessary.

“The Reserve Bank’s target is further away than ever and with a mandate like that it would look irresponsible of them not to try to give the economy a boost and try to get inflation higher.”

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