Powered by MOMENTUM MEDIA
subscribe to our newsletter

Reserve Bank makes October cash rate call

RBA
Cameron Micallef
01 October 2019 — 1 minute read

The Reserve Bank of Australia (RBA) has concluded its October meeting, announcing where the cash rate will stand for the next month following banks factoring in another rate reduction.

The RBA has announced its third rate cut for the year, slashing an already historically low interest rate. 

Despite cutting rates to 1.25 per cent in June, the RBA still considers further economic stimulus is required, having then moved the official cash rate to 1.00 per cent in July, and again today to 0.75 of a percentage point.

Advertisement
Advertisement

Top market and economic experts were not surprised with today’s move following higher than expected unemployment figures.   

In the lead-up to today’s decision, comparison site Finder had surveyed 45 of the nation’s leading economists and commentators, with one in three expecting rates to fall to 0.50 of a percentage point by the middle of next year. 

Five economists expect the rate to go all the way to 0.25 of a percentage point, with one predicting rates fall to zero.

The majority of the nation’s top economists expected today’s announcement, with Mortgage Choice’s Susan Mitchell believing the latest economic data suggested a cut.

“The August labour force data revealed an increase in the unemployment rate, as well as an increase in the underemployment rate, which is now in line with its recent peak,” Ms Mitchell said.

“National Accounts data released after the September monetary policy meeting revealed that the economy grew below what the RBA had forecast a month earlier.”

Savings for investors

Insights manager at Finder Graham Cooke stipulates borrowers will win at the expense of savers.

“If the cash rate drops to 0.75 [of a percentage point], and your lender were to pass on the cut in full, an average mortgage holder could save $19,000 over 30 years on their mortgage,” Mr Cooke stated before today’s announcement.

Reserve Bank makes October cash rate call
rba smsf 2
smsfadviser logo

Are you up to date with the legislative changes from 1 July? Contribution cap increases, super guarantees, age increases, SG rate increases. The budget announcement changes. Don’t be caught off guard by your clients’ questions. Prepare for any scenario with the SMSF Foundations course. 21 CPD hours available. Learn more

Arm yourself with the critical information that you need to ensure you and your clients continue to thrive in today’s changing environment at the free-to-stream SMSF Adviser Technical Strategy Day. Live streamed directly to you in October over three days, this event is jam-packed with expert-led sessions to arm you for success by providing the latest updates on regulatory and legislative changes impacting SMSFs. Secure your free spot today, visit www.smsfstrategyday.com.au

join the discussion

Latest poll

Do you have clients that are aged 65 or 66 planning to trigger the bring forward rules?

SUBSCRIBE TO THE
SMSF ADVISER BULLETIN

Get the latest news and opinions delivered to your inbox each morning

Website Notifications

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