Powered by MOMENTUM MEDIA
subscribe to our newsletter
Cash rate cut more likely than a hike

Cash rate cut more likely than a hike

The RBA is more likely to cut the official interest rate than introduce a hike over the next 12 months, according to a leading economist.

AMP Capital chief economist Shane Oliver has flagged the “risk” of a rate cut in the next year, rather than an increase to the official interest rate.

The Reserve Bank of Australia (RBA) announced on 6 June that the official cash rate would hold at 1.50 per cent. The last time the cash rate moved was August 2016 when it ticked down.

Advertisement
Advertisement

Mr Oliver explained: “The jobs data and the NAB survey support the RBA in leaving interest rates on hold for now. But given softer data for growth, consumer spending, housing construction, non-mining investment and wages growth, our view remains that there is more risk of another rate cut than a rate hike in the next 12 months or so.”

The economist also forecasts a slowing in national residential property price gains lead by cooling housing markets in Sydney and Melbourne.

Reflecting on the Westpac and Melbourne Institute’s consumer index for June 2017, Mr Oliver noted Australians’ current scepticism towards real estate as the “wisest place for their savings”, but added that this trend had been occurring for more than a year and “didn’t stop further gains in Sydney and Melbourne prices”.

In a speech given today, Philip Lowe, governor of the RBA said there is a “recalibration of expectations” occurring in households across the country as the average hours worked declines and wage growth is “unusually low”.

Mr Lowe commented:  “Many households are also coming to grips with higher debt levels and, in our largest cities, high housing prices. We need to watch these issues carefully.”

He added that Australia was likely to see stronger growth over the next few years compared to more recent rates of growth.

[Related: Housing sentiment hits record low: CoreLogic]

Cash rate cut more likely than a hike
mortgagebusiness

 

Latest News

The banking sector has collectively recorded a sharp year-on-year contraction in new home loan settlements in light of tighter credit condit...

The ABA has launched a consultation on formulating a new guideline for how banks deal with vulnerable customers. ...

Buying a house is viewed as less feasible than starting a business by Millennials, who still aspire to own a home, a new study has found. ...

FROM THE WEB
podcast

LATEST PODCAST: Coalition government and CBA delays

Do you think the banking royal commission recommendations could negatively impact competition in the mortgage market?