 RBA rate hike predictions
Tuesday's rate hike now looks set to be no more than 25 basis points, after financial markets down played the risk of a higher rate increase.
The anticipated Melbourne Cup rate rise has been a topic for much debate in recent weeks, following the October rate rise of 25 basis points. Economists had been suggesting a 0.50% rate rise was a real possibility.
Now, as new business data shows business faces very few cost pressures, the Reserve Bank of Australia may ease off their inflation worries and restrict the official rate rise.
And it is good news for home owners with ANZ chief executive Mike Smith promising in a Sun Herald interview not to slug its 800,000 home borrowers with variable interest rate rises above Reserve Bank rate moves.
Mr Smith said in the interview the bank would prefer not to move until the RBA does because despite positive economic data the economy was still fragile.
None of the other Big Four banks- Commonwealth Bank of Australia, National Australia Bank and Westpac - have stated their interest rate plans.
"The RBA will likely take heart from significant falls in imported producer prices, hoping the recent strength of the Aussie dollar will assist in keeping the downward momentum in consumer prices going as well," ANZ economist Alex Joiner said.
The inflation target - between two and three per cent - set by the Reserve Bank is looking safe. The consumer price index (CPI) for the September quarter, is due out Wednesday along with corresponding underlying measures of inflation.
The Reserve Bank policy meeting in October resulted in the first official rate increase in 19 months, when the cash rate was increased from 3% to 3.25% and most lenders moved quickly to pass on this increase to home owners.
Variable and fixed rate home loans have seen interest rate rises in recent weeks, but still sit lower than the crippling rates of 2008.
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