SYDNEY - The Reserve Bank of Australia is expected to cut its interest rate for a third consecutive meeting as inflation eases, local employment growth slows and fears over a European recession grows.
Thirteen out of 14 economists surveyed yesterday said the RBA would cut the cash rate to 4 per cent from 4.25 per cent when it met on Tuesday.
The central bank cut the rate at both its November and December board meetings, taking the rate from 4.75 per cent to 4.25 per cent, due to fears the eurozone government debt crisis will cause a recession.
The RBA board did not meet in January.
HSBC chief economist Paul Bloxham said that even though a February cut had been widely expected for some time, recent data could make for a close decision at the RBA board meeting.
On January 25, the Australian Bureau of Statistics reported that the annual rate of headline inflation for the December quarter was 3.1 per cent, close to the RBA's target band of 2 to 3 per cent.
Meanwhile, underlying inflation, which removes unusual quarterly price movements, was 2.6 per cent.
Mr Bloxham said the inflation data and weaker local economic figures had opened the door for a February rate cut.
He also said Australia's employment conditions were worsening, with the December unemployment rate at 5.2 per cent, up from a 2011 low of 4.9 per cent in April.
``The economy has also continued to ease back from operating at full capacity, taking further pressure off inflation,'' Mr Bloxham said.
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