Well I'm not one to agree with many of Steves predictions but...

Well I'm not one to agree with many of Steves predictions but .75% is what he thinks today as well....


THE Reserve Bank will cut interest rates by 75 basis points today, said an academic who also forecasts rates will hit zero by 2010.

University of Western Sydney associate professor of economics and finance Steve Keen said a slide in retail sales and house prices was a particular worry for the RBA.

“Some of the data that has come out in the last couple of days must have them worried,” he said.

Dr Keen said he was tipping a 0.75 per cent easing “to surprise everybody”.

Fifteen economists - from major banks, brokers and financial services groups - have predicted a 50-basis-point rate cut today, which would take the cash rate, now at 6 per cent, to 5.5 per cent for the first time since May 2006.

Dr Keen's prediction would take the cash rate to 5.25 per cent for the first time since March 2005.

The RBA board is holding its monthly meeting this morning and will announce a decision at 1430 AEDT.

Dr Keen is holding to his view that rates will fall to 2 per cent by the end of 2009, and zero per cent in 2010 - he says the RBA will cut rates by another 50 basis points next month.

He cited Australian Bureau of Statistics data, released yesterday, showing a 1.8 per cent fall in house prices during the September quarter and a 1.1 per cent decline in retail sales in September, the steepest monthly slide in three years.

Dr Keen is on the record as saying Australian house prices will eventually fall up to 40 per cent in this environment.