Mining slowdown to spark Cup day rate cut

The Reserve Bank of Australia (RBA) is expected to change the cash rate on Melbourne Cup day for a seventh consecutive year.

Twelve of the 15 economists surveyed by AAP said the RBA board will decide to cut its interest rate by a quarter of a percentage point to three per cent on Tuesday.

The struggling global economy and the sluggish performance of the non-mining sectors of the domestic economy have driven previous rate cuts.

However AMP chief economist Shane Oliver said the recent fall in commodity prices and the slowdown in the once-booming mining sector had also become a factor.

"Mining will still stay high, but some time next year mining investment will peak as a share of GDP (gross domestic product)," Dr Oliver said.

"That will potentially leave a bit of a hole in the economy that will need to be filled by non-mining parts of the economy, hence the need for lower interest rates."

The most recent rate cut was at the October meeting, by a quarter of a percentage point to 3.25 per cent, which was the the fifth interest rate cut in the past 12 months.

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