The betting on an easing following the Reserve Bank's Melbourne Cup day board meeting next Tuesday -- coinciding with Australia's biggest horse race -- heated up after third quarter CPI and wages data this week that showed inflationary pressures remain minimal.

Though strong Q3 wages numbers did dampen some of the market fever, analysts dismissed the data as volatile and not representing a threat to the inflation outlook.

The Reuters poll of 25 economists found a median chance of a cut next week in the 5.0 per cent official cash rate of 45 per cent.

The money market has already priced in 50 basis points of easing by the end of the year, and the overwhelming majority of economists believe the only question about an easing in policy is the timing of amove.

The RBA last lowered official rates by 50 basis points in July last year to 5.0 per cent.

In a global climate of lower interest rates and with the domestic economy expected to slow in the coming year, there is little to stand in the way of another easing, analysts said.

"The economy is slowing, there's no threat from inflation or wages, and the Australian dollar is firmer," said Macquarie Bank economist Michael Straughan.

"The temptation is too great, the cookie jar is open," Straughan said, who sees an 85 per cent chance of a cut next week.

Another barrier to a rate cut was removed this week when the September quarter consumer price index revealed a barely visible 0.2 per cent increase in prices, allaying lingering concerns that the decline of the Australian dollar over the past year would feed inflationary pressures.

Some now believe inflation will only peak around 2.0-2.5 per cent next year, below the bank's last published prediction of 2.5-3.0 per cent. Spreading signs of globaldisinflation since then have convinced many analysts the bank was too pessimistic.

"The biggest risk to the economy next year is if the RBA drags the chain and doesn't do anything for months," National Mutual economist Toby Johnson said.

But the odds of a cut next week were evenly balanced. "It's the closest call on a rate move that I can remember," he said.

Although there are signs of weakness in some leading indicators such as housing finance, the central bank may want to see more concrete signs of an economic slowdown over the coming months. Economic growth is expected to slow to about 2.5 per cent this year from 4.0 per cent in 1997-98.

But many see insurance against a greater than anticipated slowdown next year as a risk-free move for the central bank.

"The grounds for a cut in official interest rates are almost overwhelming. So much so that, if a rate cut does not occur, the Reserve Bank should be made to explain why," Colonial State Bank chief economist Craig James said.

The Reserve Bankmight wait to see another easing by the US Federal Reserve, though economists are divided over whether the bank would want to associate an easing here with US policy.

"The Fed is a non-issue for the RBA. They have been running their own race for years now," said GIO chief economist Akis Haralabopoulos.

Nor does Australia face the kind of risks to the financial system that gave the Fed an added sense of urgency.

Two swift easings by the Fed over the past month paved the way for a domestic cut, and brought official cash rates in the two countries into line for the first time in more than a year.

The Reserve Bank may want to see the US cash rate fall below Australia's, probably at the November 17 FOMC policymaking meeting. That would make an Australian cut at the December meeting more likely.

Central bank board members will also have an eye on the Australian dollar, though its resilience at around 62 US cents in the face of easing speculation suggests a move is factored in.

"I think it is priced intothe Australian dollar, and I just can't seem them (RBA) waiting until December," Societe Generale senior economist Glenn Maguire said. "The interest rate differential argument only applies at the cash rate. The US yield curve is significantly below ours."

There was some debate on the size of any cut next week. In recent times, the central bank has moved in increments of 0.5 percentage points, but governor Ian Macfarlane noted earlier this year there was "nothing sacred" in the amount of a move.

Smaller cuts of a quarter-point, such as those made by the Fed in recent weeks, are considered more appropriate when interest rates are already at fairly low levels and a series of smaller moves can maximise the impact of each easing.

"There are significant announcement effects which would tend to argue for two smaller moves of 25 basis points," said Nomura Australian senior economist Andrew Pease.

The survey found 17 analysts expect a move next week would be of 25 basis points, compared with eight looking for50 points.