Signs good for rates cut

Many now expect the central bank to cut rates by 0.5 percentage points over the next two months.

Kieran Salsone

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FAVOURABLE inflation figures and growing confidence that the Reserve Bank will cut interest rates have sparked a rise in the sharemarket, with investors piling into bank stocks.

The S&P/ASX 200 Index ended the day up 47 points, or 1.1 per cent, to 4271.3 - the highest in six weeks - after figures showed inflation was unchanged over the last three months of 2011.

Market economists said the data cleared the way for the Reserve Bank to cut rates when it met next week.
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Many now expect the central bank to cut rates by 0.5 percentage points over the next two months.

But cuts in the official interest rate will not necessarily be passed on to home lending customers, and that would benefit bank earnings.

Read more at Brisbanetimes.com.au