The Reserve Bank is set to lower the official cash rate in the coming months, according to industry veteran John Kolenda.
The 1300HomeLoan co-founder and managing director said "gloomy" business and consumer sentiment coupled with weaker than expected home loan approvals is providing the RBA with enough reason to make another cash rate cut.
Mr Kolenda said the latest ABS data showed home approvals in January fell 3.5 per cent – much further than "economists’ expectations of a 2.0 per cent reduction”.
The figures follow the NAB's business confidence index falling to its lowest level in two years, along with the ANZ-Roy Morgan consumer confidence index dropping to a three-month low.
“The RBA resisted the chance this month to make another rate cut after taking the cash rate down to a record low of 2.25 per cent at its February meeting,” Mr Kolenda said.
“It will be no surprise to even see the RBA take the cash rate below 2.0 per cent for the first time in the months ahead.
“The RBA left rates alone for almost 18 months before its February decision, but further cuts may help to get things moving and boost consumer and business confidence, which has not been helped by the continually uncertain and unpredictable national political climate.”