Business conditions slump to 14-yr low

A new survey has revealed business conditions have slumped to their lowest level in 14 years, backing the need for today's expected interest rate cut.

The Commonwealth Bank-Australian Chamber of Commerce and Industry business expectations index found conditions had fallen to an index of 41.1 over the September quarter, its lowest level since the survey began in 1994.

A level below 50 indicates business conditions are contracting.

"Despite headline inflation hitting a 13 year high of 5 percent over the year to September, ACCI considers inflation will be moderating in coming months as evident in the survey, and due to weaker domestic demand," ACCI director of industry policy and economics Greg Evans said.

"Given the decline in growth and business confidence, these results should pave the way for a further significant interest rate cuts, following the RBA's successive cash rate reductions in September and October."

The Reserve Bank of Australia is expected to announce a 50 basis points cut to the official rate, which would take it to 5.5 per cent, its lowest level since May 2006.

Last month the RBA stunned the market by cutting the rate by 1 per cent.