Futures market pricing indicates a 71 per cent chance that the RBA will increase the official cash rate by 25 basis points to 4 per cent when the board meets in Sydney today, for the first time this year.
Ahead of the meeting, the Australian dollar fell US1c to US88.33c while the sharemarket extended January’s 6.2 per cent loss into the new month with a 1 per cent, or 45.5 point, fall in the S&P/ASX 200 index.
ICAP senior economist Adam Carr said the financial markets judged that there was a small chance — 30 per cent — that the central bank will choose to keep interest rates on hold, and this was a reasonable assessment.
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