Powered by MOMENTUM MEDIA
subscribe to our newsletter

Talk of rate cut gains momentum

Sentiment towards rates has shifted in recent weeks with almost all banks now confident the Reserve Bank will cut the cash rate next year.

Only three of 37 experts recently surveyed by comparison website finder.com.au had forecast that the official cash rate would fall in 2015.

However, another five have now predicted a rate fall next year.

The Reserve Bank of Australia left the cash rate at a record-low 2.5 per cent for the 16th consecutive month when it held its monthly meeting on December 2.

The trio that previously forecast a rate cut in 2015 were Andrew Wilson from Domain Group, Stephen Koukoulas from Market Economics and David Scutt from Scutt Partners.

Advertisement
Advertisement

They have now been joined by Bill Evans from Westpac; Shane Oliver from AMP Capital; James Bond from the Financial Services Council; Noel Whittaker from QUT Business School; and Scott Pape from Barefoot Investor.

Mr Evans, who is chief economist at Westpac, forecast that the Reserve Bank would cut the cash rate both in February and in March. That would lower rates to at most 2 per cent.

Mr Oliver, who is the chief economist at AMP Capital, said there would be a 0.25 per cent cut in either February or March.

He also said there was a 50 per cent chance of another rate cut in April, May or June.

Mr Oliver said the Reserve Bank would be concerned that commodity prices have fallen too quickly, the Australian dollar has not fallen low enough and the non-mining sectors of the economy are not growing fast enough.

PROMOTED CONTENT


"As a result, it's become increasingly clear that more monetary easing is required in the form of a further significant fall in the Australian dollar and lower interest rates," Mr Oliver said.

"Without the latter, the Australian dollar may not fall enough. Fortunately, low inflation and a loss of momentum in house prices provide the Reserve Bank with plenty of flexibility."

 

Talk of rate cut gains momentum
mortgagebusiness

Latest News

Sales of new detached homes continued to increase for five consecutive months, despite the end of HomeBuilder grants, confirming a strong d...

An economist with Bluestone has responded to predictions that the cash rate will increase in August, calling the notion “nonsensical”. ...

The Real Estate Institute of Australia (REIA) said it’s expecting demand for sustainable homes and living to increase over 2022. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

When do you expect the cash rate to start increasing?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.