Verante Financial Planning director Liam Shorte also said the RBA cutting the official cash rate to 2.25 per cent is another “kick in the teeth” for conservative SMSF trustees and self-funded retirees.
“I can't find a six-month term deposit paying above 3.45 per cent and three-year government bond is below 2.0 per cent,” Mr Shorte said.
National Seniors chief executive Michael O’Neill similarly said that seniors living off simple investments such as term deposits will be worst hit.
“Seniors aged over 65 own 45.3 per cent of bank and financial institution term deposits and most of them are on low, fixed incomes,’’ said Mr O’Neil.
Term deposits, he said, are a preferred investment for many pensioners and self-funded retirees in particular because of the security and peace of mind they provide.
“[The] cut simply means less money in the pockets of many, many retirees around Australia,” he said.
CPA Australia chief executive Alex Malley, on the other hand, applauded the decision by the RBA to cut rates, stating it was a positive move for Australian businesses and households.
Mr Malley said the move has signalled to global markets that Australia has the “tools to promote investment and economic activity and is prepared to use them to boost Australia’s global competitiveness”.
“[Yesterday's] interest rate cut will further support the current downward pressure on the Australian dollar and facilitate business’ ability to sell its products and services to the world, strengthening our terms of trade,” he said.
AMP Capital chief economist Shane Oliver also said the RBA was right to cut the cash rate to 2.25 per cent and said the benefit to debtors will outweigh lost income for those with deposits, with $850 billion currently sitting in bank deposits in Australia but $2050 billion in debt.
Mr Oliver also expects a further cut to the official cash rate.
“Rate moves are like cockroaches, there’s usually more than one so expect another 0.25 per cent rate cut to 2.0 per cent around April,” he said.