Business expects official interest rates to remain steady after a meeting of the Reserve Bank of Australia (RBA) board later on Tuesday, but does not see this as a sustainable position.

Economists and financial markets are widely tipping the cash rate to stay at 3.0 per cent when the central bank announces its rate decision at 2.30pm (AEST).

The RBA cut the cash rate by 25 basis points in April, bringing total reductions to 4.25 per cent since September last year.

The Australian Chamber of Commerce and Industry (ACCI) expects the RBA to stay on the sidelines to assess the impact of the federal government’s second stimulus package and next Tuesday’s budget.

“However, we don’t believe it is a sustainable position,” ACCI director of industry policy and economics Greg Evans told reporters in Canberra.

Further deterioration in employment and business investment was expected, and business needed the benefit of further rate reductions during the next three to six months.

“Businesses missed out on a lot of the official easing in interest rates … a lot of that is only still being passed on in half to Australian business,” Mr Evans said.

Many small businesses were still paying 10 per cent interest on their overdraft.

“That is not acceptable.”

AAP