Majority of economists punt on Melbourne Cup Day RBA cash rate cut: Bloomberg

A clear majority of economists expect the Reserve Bank to reduce the cash rate by a further 25 basis points on Melbourne Cup Day (November 6), according to the latest survey by Bloomberg.

Out of 24 economists polled today, 17 expect the cash rate to fall to 3% in November. This would be the lowest the cash rate has ever been, equal to the rate in 2009 during the GFC.

All the big four banks are in agreement on a rate cut in November.

Interestingly, St George Bank chief economist Besa Deda is tipping the cash rate to remain on hold in November, while Bill Evans, chief economist at parent bank Westpac, expects a rate cut.

Another notable economist not tipping a rate cut in November is HSBC Australia chief economist Paul Bloxham, who had favoured November over October – but not a rate cut in both months.

“The [earlier October] cut reflected concerns about weaker global conditions, particularly slower growth in China,” said Bloxham in his weekly RBA update.

“With activity in China showing some signs of bottoming we think the RBA's easing cycle may be nearing its end.”

Only one brave economist (Michael Knox from RBS Equities) is tipping a rate cut in December on top of a November rate cut, which would take the cash rate to 2.75%.

Ten out of 24 economists tip another rate cut in the first quarter of 2013.