Rates expected to stay on hold in Australia

The Reserve Bank of Australia (RBA) board is expected to keep interest rates on hold when it meets today ahead of next week's Federal Budget.

A survey of 19 economists by Bloomberg found that most think rates will remain unchanged at 3 per cent.

Macquarie Group interest rate strategist Rory Robertson says the Reserve Bank will bide its time.

"I think that the Reserve will probably sit on its hands this month," he said.

"But it will be under pressure to cut rates at each meeting for the rest of the year and I think by the end of the year, we will see the cash rate cut from the current 3 per cent all the way down to 2 per cent and perhaps less later on.

"The fact that the Australian economy is in recession and the fact that unemployment is rising and full-time employment is falling is something that will keep pressure on the Reserve Bank to cut further as time passes."

The central bank cut rates by a quarter of a percentage point last month, but the big banks failed to pass on the reduction in full.

Rates have fallen by 4.25 percentage points since September last year.

- RADIO AUSTRALIA