28 Nov 2008

Another rate cut tipped for Australia

4:51 pm on 28 November 2008

The Reserve Bank of Australia is tipped to slash the official interest rate before Christmas as the global financial crisis continues and fears mount of a possible recession in Australia next year.

All 18 economists surveyed by AAP expect the Reserve Bank of Australia to cut interest rates on Tuesday.

Eleven expect the cash rate to be slashed by 75 basis points, following the bank's monthly board meeting on 2 December.

This would take the official cash interest rate, now at 5.25%, to 4.5% for the first time since June 2002, after a cut of 75 basis points in November.

However, five of the economists polled are tipping an even larger 100 basis point rate cut of 100 points. This would take the cash rate to 4.25%.

Rates have not been below this level since the bank began publishing its overnight cash rate target in 1990.