Reserve Bank interest rates decision could boost Australian dollar

THE dollar could get a mild boost if the Reserve Bank of Australia (RBA) dishes out a no-change decision on interest rates this afternoon.

Cut coming? ... The Reserve Bank is tipped to keep the official cash rate stable at 3 per cent / File

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THE dollar could get a mild boost if the Reserve Bank of Australia (RBA) dishes out a no-change decision on interest rates this afternoon.

The RBA holds its monthly board meeting today, with its decision on interest rates expected at 2.30pm (AEST). Most economists are expecting the cash rate to remain unchanged at a 49-year low of 3 per cent.

Join us for LIVE coverage of the RBA's rates decision today from 2.15pm (AEST) 

Experts forecast board members will take a wait-and-see approach as improved economic outlook and the flow through effects of the Federal Government's stimulus packages becomes clearer.

In a survey of 20 Australian economists, 19 said an improved economic outlook would most probably persuade the central bank to leave the cash rate at the current levels.

In the minutes of its April board meeting, the RBA said "tentative signs of improvement" could be seen in some economic indicators for several countries, but it was "too early to judge how durable they would prove to be".

At 7.00am, the dollar was trading at $US0.7402/10, up from yesterday’s close of $US0.7361/65. It was the strongest start to the local session since October 6 last year, when the unit began the trading day at $US0.7680/86.

Wells Fargo currency strategist Vassili Serebriakov said a no-change decision, although largely priced in, would be mildly positive for the dollar.

The RBA has slashed 425 basis points from interest rates since September, since then repayments on the average $400,000 mortgage has dropped by about $1000 a month.

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