RBA tipped to cut rates

Tumbling mining profits and deepening concerns over the strength of China may today force the Reserve Bank to take interest rates lower than they were during the Great Depression.

The Reserve sliced interest rates by a quarter percentage point last month, with markets putting the chance of a follow-up cut at better than 50 per cent.

Such a move would take the official cash rate to just 2 per cent.

Figures from the Australian Bureau of Statistics yesterday spelt out the problems.

The mining sector recorded pre-tax company profits of less than $4.6 billion in the three months to the end of December, the smallest quarterly profit since early 2005.

And mining lost its position as the most profitable sector, eclipsed by the rental and real estate sector.

Wages are also struggling, with bureau statistics showing that total incomes grew slower than inflation through recent months.