RBA likely to hold bank rates at current level

The Reserve Bank board of Reserve Bank of Australia meets next week on November 3. The board is expected to keep rates on hold, states Westpac. The surprise drop in the inflation measure is not unique and, in the past, the Bank has looked through a one off number.

The motivation for cutting next week would be a significant downward revision to the growth outlook. The data flow and the RBA's recent commentary does not point to such an event. Consequently the bank rates are expected to stay around the current record lows, said Westpac in a research note on Wednesday.

The drop in core inflation was known at both the November and December meetings but it was the surprise slump in growth that was recorded in the September quarter GDP report that printed the day after the December board meeting that prompted the rate cut.