George Worthington, chief economist for the Asia-Pacific for IFR Markets said upcoming minutes from the RBA's meeting two weeks ago are "likely to reinforce the view that the central bank will start its easing in September." He said recent signals and speeches combined with a fall in retail trade for the June quarter support a September cut.

"The RBA is confirming-as much as a central bank can-the market's view of a rate cut in just two weeks' time," he said, adding he feels the coming cut will be for 25 basis points. "A 50bp move seems unlikely; the Reserve Bank has plenty of room to ease if partial indicators show the economy slowing by more than expected, but a second move in October seems likely and perhaps even a third before the end of the year."

On the other hand, BMO Capital Markets economist Jennifer Lee is calling for the bank to hike rates. "They left the cash rate at a 14-year high of 7.25% (at their last meeting), where it had been since March," she said, adding that the RBA's monetary policy statement that followed a week later was more dovish than expected, which pushed up expectations that the central bank will hike rates in the near future. "The minutes will likely reflect that dovish tone," Lee added.

Peter Pontikis, currency strategist with Suncorp Banking, definitely sees a cut in the near future, but not necessarily in September. The meeting "will be a matter of all of us holding our breath looking for the clues as to whether they planned to cut either at their last meeting or wanted to start preparing us for one in September," he said.

Pontikis points out that recent statements by the RBA "sound like they will wait till at least September, and if the private sector gauges on inflation are anything to go by; they have not got the business case to go just yet. Media clamour or no media clamour for one. Sounds more like October (when they have the latest inflation data due out) at the earliest."

Markets are pricing in a 100% chance of a 25bp cut and a 22% chance of a 50bp cut by the next meeting.

By Megan Ainscow, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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