The Reserve Bank is likely to keep the cash rate on hold as it waits on the outcome of the federal election and allows its August rate cut to work its magic.

All fourteen economists surveyed by AAP expect the RBA to keep the cash rate at the record low of 2.5 per cent when it meets later on Tuesday.

HSBC chief economist Paul Bloxham said the RBA would wait to see what happens to business confidence following the federal election, with governor Glenn Stevens having expressed concerns about weaker sentiment.

"The election will hopefully deliver some more certainty about the policy framework and objectives, whichever side wins," Mr Bloxham said.

He also expects the RBA's next move to be reliant on the Australian dollar, with the central bank more comfortable with a currency closer to 85 US cents.

National Australia Bank senior economist David de Garis said there was room for another rate cut before the end of 2013 - even if the Aussie dollar falls further - with unemployment forecast to push through 6.0 per cent.

"The RBA have made it pretty clear that even with the Aussie dollar going down, they still expect inflation to be within their target bands and so there's not going to be a barrier to another cut," Mr de Garis said.

 

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