Central bank rate cut ‘likely’

After revising it’s outlook for official interest rates, JPMorgan is predicting the RBA will be likely to cut interest rates by 50 basis points next month, as the global economy worsens.

Chief economist Stephen Walters has signalled the RBA may need to cut official interest rates when they meet next month, after the central bank chose to keep interest rates on hold this month at 3.25 percent.

“A more problematic outlook for the global economy, though, and signs that the performance of Australia’s economy rapidly is coming back to the pack, means waiting for more information has become a luxury RBA officials no longer can afford,” he said.

If JPMorgan predictions are right, the cash rate could be dropped to as low as 2.75 percent.

Mr Walters believes that Australia is now in recession and the RBA must take measures to stabilise the economy.

The RBA board will meet on April 7 to determine if interest rates will be lowered.

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