As expected, interest rates have remained unchanged today.
There were no solid reasons to cut them back at the first meeting of the New Year's Reserve Bank, although some industry insiders have set February as the month when we would see the cash rate drop to 0.50%.
I have seen research and comments from economists who believe that we will have another drop in interest rates by the end of the fiscal year in June. However, I do not know what it will be for, or what it might lead to?
The economy is changing, but it is not exactly moving forward.
The lagging employment and inflation figures, as well as the growth of low wages, do not paint a picture of economic dynamism. Access to credit remains tight, despite interest rate cuts last year, and problems with planning reforms, taxes, fees and stamp duties continue to worsen # 39; affect consumer confidence in the real estate market.
The eruption of interest rate cuts last year had the desired impact on the housing market and saw Sydney and Melbourne bounce back, but most of the parameters have stagnated.
If the Reserve Bank sees enough motivation to lower rates again, there is no guarantee that banks will pass them on, and that could do little more than bring us closer to a rate of 0% – at that At that point, the Reserve Bank's levers are officially exhausted. The only place to go is quantitative easing.
Is Cheaper Credit Really the Answer Here? Time will tell us.
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