Big rate cuts predicted by markets

Futures markets are now factoring in more than 1.25 percentage points of cuts in interest rates over the next year, after the Reserve Bank board left rates unchanged at 4.75 per cent.

The head of Asia-Pacific research at TD Securities, Annette Beacher, said markets remained nervous as European leaders grappled with the region's debt crisis.

“As far as the market is concerned, there is just too much volatility out there for the Reserve Bank to increase interest rates,” Ms Beacher said.

Source: The Age