The Reserve Bank of Australia board will start its two-day meeting today, with an interest rate reduction looking almost certain.

Economists are tipping the central bank will announce tomorrow at 2.30pm (AEST) a 25-basis-point cut, which would bring the official cash rate down to 3.60 per cent.

If banks pass this on in full, a homeowner with a $500,000 mortgage will save $2884 per year compared with what they were paying at the start of the year before the RBA started cutting the cash rate.

A widely anticipated reduction failed to materialise last month, when the cash rate remained on hold at 3.85 per cent, stunning mortgage owners.

But economists say the RBA board has no excuses not to make a cut this week, with the latest quarterly data showing inflation is within its target range of between 2 per cent and 3 per cent.

Headline inflation dropped to 2.1 per cent, the lowest figure in four years.

A softening labour market has also bolstered expectations that the cash rate will come down.

Data for June showed the jobless rate jumped to 4.3 per cent, the highest level since 2022.

The market is even pricing in a roughly fifty-fifty chance of a supersized 50-basis-point cut which would bring the official cash rate down to 3.35 per cent.