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Another rate cut forecast for 2015

Another rate cut forecast for 2015

The odds of a further cash rate cut this year are growing, with predictions it could happen as early as today, according to financial comparison website RateCity.

The group analysed over 20 global and domestic economic indicators in an attempt to understand what will influence the RBA’s cash rate decision when its board meets this morning.

RateCity financial analyst Peter Arnold said overseas activity could have a strong hand in deciding the outcome.

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“With the events of the past fortnight – the economic situation in China and how that had fed into the Australian share market’s mini crash – the chance of a cash rate cut has increased significantly,” he said.

“Whether the RBA cuts [today] is very hard to say. While it looks like a cut is the likely outcome it’s all about the timing. I think we’ll get a cut this year and I’m betting on a cut by the time Melbourne Cup runs in November.”

Mr Arnold noted that beyond global economic pressures, a buoyant domestic housing market will influence the board’s decision today.

“While on one hand the lenders are looking to put the brakes on investor lending, the flipside of that is that owner-occupiers are being given hotter deals on home loan rates in some cases,” he said.

“What that means is that the RBA has less need to cut because owner-occupiers are getting better deals on home loan rates without the need for the RBA’s prodding. But on the other hand, if the RBA board wants to cut the cash rate, they can do so safely because a cut is unlikely to be passed on by the lenders to investor borrowers.”

Another rate cut forecast for 2015
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