Despite reiterating at its December meeting that it’s aiming for a period of stability with interest rates, the RBA has today cut the official cash rate by 25 basis points to 2.25%.
Westpac’s chief economist Bill Evans said prior to the meeting that “the most likely scenario” would be a rate cut in February.
“With markets now settling on the strong likelihood of a March move we see February as a much more attractive option for the RBA,” Mr Evans told comparison website finder.com.au.
Rams head of product and digital, Nathan McMullen, also predicted the RBA would drop the official cash rate after the February board meeting.
“Benign inflation outlook, low consumer confidence coupled with the need to bolster domestic demand and depreciate the $A before more evidence of growth locally and internationally emerges,” he told finder.com.au.
I am not sure what this will do for our economy as the dollar was already heading down and this will have little effect on small business growth as they struggle to get any financing never mind fair rates. Banks concentrating on property loans.
As for conservative SMSF Trustees and Self Funded Retirees this is just another kick in the teeth. Pressure will be on Centrelink to reduce Deeming rates in the March 20th Review as I can’t find a 6 month Term Deposit paying above 3.45% and 3 year Govt Bond is below 2%.