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Analysts anticipate rate cuts to 1.5%

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There is increasing speculation of a rate drop this year to 1.5% among industry experts.
 
Early this year, the RBA historically dropped the cash rate to 2.25%. Today, they left the official interest rate unchanged.
 
Among the reasons that fuel speculation of another all-time low interest rate drop are the softening of the Chinese economy, the mining sector suffering bigger challenges than expected, and the high Aussie dollar.
 
But AMP chief economist Shane Oliver said he wouldn’t be surprised to see the rate dropping to 1.5% or 1.75%. He added that he foresees two more rate cuts left.
 
“It wouldn’t surprise me if we saw the cash rate at 1.5% or 1.75%,’’ he said. “Those people who already have a mortgage are choosing to pay it off as quickly as they can.”
 
“I would hope and pray it doesn’t go any further than that because that would signal that our economy is really heading the wrong way. We want interest rates to start dribbling up because that’s a signal that the economy is getting back on its feet and we are heading in the right direction.”
 

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