Australian Reserve Bank tipped to hold rate steady

Reserve Bank of Australia Governor Glenn Stevens speaks before the House Of Representatives standing committee. Photo / Getty Images

Australia's Reserve Bank is likely to hold the cash rate this month, but the soaring Australian dollar is becoming a concern.

Fifteen economists surveyed by AAP expected the central bank to keep the cash rate at a record low 2.0 per cent for a 12th consecutive month at its Tuesday meeting.

"The RBA is expected to be on hold next week. Domestic growth is solid, commodity prices have lifted and global markets have stabilised. There is no pressing need to cut," HSBC chief economist Paul Bloxham said in a note.

However, the RBA has been increasingly jawboning the strong Australian dollar, presumably due to its potential to dampen growth and inflation.

The central bank has been counting on a weaker dollar to drive the economy's transition away from mining.

The currency was sitting above US76c yesterday, a 12 per cent rise from a six-year low of US68.27c per cent in January.

In response to a question about whether the dollar was moving out of line with fundamentals last week, RBA governor Glenn Stevens admitted there was a risk "the currency might be getting a bit ahead of itself".

However, BNP Paribas rates strategist Altaz Dagha said the currency wasn't a risk to the broader economy just yet.