Rates predicted to fall to 3 per cent

Speculation is mounting that the Reserve Bank will again cut rates in two weeks.

JP Morgan forecasts the Reserve Bank will again lower interest rates next month, cutting the official cash rate by 25 basis points to 4.25 per cent.

JP Morgan believes the RBA will wipe a further 50 basis points off the base rate in the first quarter of 2012 – a move that would send waves of relief across the struggling retail sector.

JP Morgan chief economist Stephen Walters says the risk of aggressive action by the RBA is “rising by the day” as European conditions deteriorate.

Source: Herald Sun

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