Interest rates: Which way for RBA to go on interest rates.

The RBA meets tomorrow to decide on interest rate levels in Australia

In the twelve months to March 2012 inflation has fallen below 2%, and this is seen by many to be a good indicator that the RBA will reduce interest rates by .25%

Australia has the luxury of the ability to reduce rates at least two percent if the need arose to kick-start the economy, and some are saying that the time to act is now.

The "Goldilocks inflation rate band" in Australia is 2.0% to 2.8%. Last month recorded it fell to just 0.1% [for February].

The RBA would be reluctant to move on interest rates anytime inflation is in the Goldilocks band, Between 25% and 2.8%. Now that the inflation rate has moved below that hopes are rising in the mortgage belts of Australia that the rate will be reduced, at least to compensate for the big bank rate hikes in recent weeks to fill the profit gap squeezed by Government Policies that banned many bank fees and charges.

The inflation rate was just .1% for February and that may be a trigger to get the PBA to take action.

Market view is a hold on Interest rates

On the other-hand the market view is that the RBA is more likely to stay put on interest rates, and leave the cash rate at 4.25 per cent when it meets tomorrow.
With unemployment low at at steady 5.2%, and many believing that the RBA views house prices as needing to fall further to make housing more affordable, a hold on rates is the most likely income.

So the pinch on mortgage repayments looks to continue.

If you are feeling the pinch, maybe you should look at the great mortgage rates on offer at non bank lenders. That way you will get a reduction in home loan repayments regardless on what the Reverse bank decides.
Some lenders are offering rates near 1.0% below the banks, and they don't have shareholders to satisfy