ECONOMISTS are divided on whether the next move in the Reserve Bank of Australia's interest rate will be up or down, and how far away that move may be.
They do agree that the cash rate will stay at 2.5 per cent for several months, with all 13 economists surveyed by AAP forecasting no change in the first half of 2014.
Three of those surveyed say there will be a quarter of a percentage point cut by the end of 2014, and six are forecasting a rise before the end of 2014.
The remainder say no change.
Australia's central bank holds its March board meeting on Tuesday.
After the February board meeting RBA governor Glenn Stevens indicated he was not inclined to cut the cash rate from its current record low.
"On present indications, the most prudent course is likely to be a period of stability in interest rates," he said.
An argument for increasing the cash rate would be higher inflation.
The official consumer price index (CPI) rose 2.7 per cent in 2013, which is towards the higher end of the RBA's two to three per cent target bank for inflation.
However business investment data for the December quarter, released on Thursday, showed Australia's mining investment boom is well and truly over, but other parts of the economy aren't quite ready to pick up the slack.
Citigroup head of economics Paul Brennan said the RBA's policy stance after the February meeting should have been one inclined to cutting the cash rate.
"With the rotation of economic growth towards domestic demand proving to be somewhat drawn-out, sentiment to help guarantee a return to trend growth in a timely manner would arguably be better supported by a more accommodative RBA," he said.
Mr Brennan expects the RBA to maintain its neutral policy bias on Tuesday and keep the cash rate unchanged for the rest of the year.
HSBC chief economist Paul Bloxham said the bank will increase the cash rate later in the year but this is reliant on an improvement in employment growth.
Unemployment rose to a 10-year high of six per cent in January after a year of weak jobs growth.
"With inflation already in the upper half of the RBA's target band and timely indicators suggesting that domestic demand is lifting, we see little scope or need for the RBA to cut rates further," Mr Bloxham said.
"We believe the key for determining when rates may rise is the labour market and see the RBA as unlikely to lift rates until the unemployment rate is falling.
"Our central view is that the unemployment rate will peak around the middle of the year."
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