Hope for a reduction in rates by RBA on 3 July 2012

Comments on Shaun Vahey ", Keep rates on hold, says CAMA shadow board", 2/07/2012, https://theconversation.edu.au/keep-rates-on-hold-says-cama-shadow-board-8031

From aggregate GDP point of view and the housing market, rates should be held unchanged.

However, there will not be too large risks should rates go down a bit, given that mining investments are unlikely to be affected by RBA overnight rates and a lower rate should provide a boost to the other sluggish sectors and states that have struggled.

The difficulty is asset markets, especially housing market which is clearly still high as compared to other advanced countries. Stock market in Australia is probably undervalued as opposed to overvalued, and should not be a problem.

But it is difficult for the RBA to influence the housing market without significantly hurting the real economy.

Australia's interest rates are relatively high as compared to other advanced economies and we are having a multi-speed economy.

I'd hope there will be a 25 base points reduction on Tuesday.