Speculation on the direction of interest rates is likely to continue as the RBA announced its decision to keep the official cash rate on hold at 1.5%.

A case for more stimulatory action by the RBA had been building with inflation consistently below 2% since 2016 reflecting weak wages growth, and more recently, a cooling housing market. However, unemployment remains steady at around 5%, with labour demand remaining favourable.

Last month, Macquarie forecasted that the RBA would cut rates twice this year and we maintain this view, expecting the RBA to take the cash rate to a historic low of just 1% in 2019.