The Reserve Bank of Australia's board will meet tomorrow where they will decide upon the immediate future for Australia's official cash rate.
As it stands, the members are widely expected to leave interest rates on hold, just as they have done since May when they cut the cash rate to a record low 2 per cent. Indeed, Sky News recently revealed that all 16 economists surveyed by AAP expect rates to remain unchanged, as do the 25 economists recently polled by Reuters.
One of the primary reasons behind this belief is the strong outlook from the United States (with the nation growing at 3.7 per cent annually) as well as easing fears of a debt crisis in the Eurozone.
Regardless of whether the RBA cuts rates tomorrow there could well be a case for further easing in monetary policy in the near future.
In fact, some pundits are even calling for two interest rate cuts before the end of the year, which could bode well for high-yield dividend-paying companies like Woolworths Limited (ASX: WOW), Telstra Corporation Ltd (ASX: TLS) and even Commonwealth Bank of Australia (ASX: CBA) (although I still believe the bank is an expensive prospect).
Indeed, Australian investors have grown increasingly cautious following last week's sudden market crash and the outlook for China has once again been called into question.
Of course, given that they are our biggest trade partner, that does not bode so well for Australia which could suggest more easing is necessary to bolster both consumer and business confidence – especially given that inflation levels are well within the RBA's target range.
While investors should expect to see interest rates remain at 2 per cent tomorrow, don't be surprised if they're cut further before the end of the year.
