The Commonwealth Bank of Australia’s economist warns the tax rebates, anticipated after the election, could mean the Reserve Bank of Australia will not need to cut rates.

Unemployment figures out today show the rate has risen to 5.2 per cent, strengthening the popular belief that the Reserve Bank of Australia will cut interest rates.

But, CBA’s senior economist Gareth Aird tells Ross Greenwood government tax cuts could balance the economy.

“When we run the numbers, that works out to us at around 7 and half billion dollars will be coming back to the household sector which is worth about two interest rate cuts.”

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