What does the Future Look Like for Interest Rates?
01 September 2013 by Lisa Stromborg
With the Reserve Bank of Australia (RBA) meeting tomorrow, the housing industry is anxious as to whether it will once again cut interest rates, or are we about to see an increase in interest rates in the upcoming months?
Economists agree that another interest rate cut on September 3, 2013 is unlikely to happen, primarily because it’s five days short of the country’s Federal election. Another 0.25% cut is expected in the last few months of the year, bringing down interest rates to another record low of 2.25%.
Low interest rates are expected to boost the country’s economy, however, according to HSBC Chief Economist Paul Bloxham; further cuts are not expected in the next few months. He added that “while the RBA has room to cut further, we still expect that they may not need to. Lower rates should gain further traction in the economy and the
lower Aussie dollar is also expected to help support growth.” The upcoming September 7 election is also expected to stabilise the economy, “as it should help to remove uncertainty for businesses about the regulatory environment,” according to both Bloxham and HSBC colleague Adam Richardson. Therefore, unless economic conditions further deteriorate, the housing industry is unlikely to see any interest rate cuts soon.
Aside from the exchange rate and current economic conditions of the country, other factors that may influence the RBA’s decision to introduce further cuts in interest rates in the latter part of the year, is the current state of the non-mining industry and the business sector, in general. The RBA did assure citizens that “the board would continue to examine the data over the months ahead to judge whether monetary policy was appropriately configured.”
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Scott Partridge is franchise manager for Mortgage Choice, Parramatta. Contact Scott on 02 9659 2000 or email: email@example.com