Feb rate cut on the cards

AMP's senior economist Bob Cunneen predicts the cash rate will drop to 4.0 per cent in February. According to Mr Cunneen, the latest retail spending data suggests the Australian economy is flatlining, which should encourage the Reserve Bank to look at rates.
Data from the Australian Bureau of Statistics found retail sales were flat in November – below the market expectation for 0.4 per cent growth. In year-ended terms, retail sales rose 3.1 per cent, which is well below the long run average of 5.6 per cent year on year.
TD Securities head of Asia Pacific research, Annette Beacher, said “Inflation tumbled over the course of 2011, paving the way for the RBA to shift monetary policy back to a neutral setting in the final months."
"As we anticipate many more months of global financial market ructions due to the unravelling European debt crisis, as well as underlying inflation dipping beneath the bottom of the RBA’s target band, we expect a 25 basis point reduction in the cash rate to 4 per cent at the 7 February RBA Board meeting."
Beacher said should the board choose to hold the cash rate steady in February, the rate would still move some time by mid year to 3.5%.