Expert speculates interest rate cut before Christmas

Font size :
The Reserve Bank of Australia (RBA) might have to cut interest rates before the year ends, said Peter Esho, chief market analyst for Invast.
Esho shared his thoughts following the recent release of benign inflation data.

With the current strong performance of the Australian dollar, Esho said that any move above US$0.73 would be a selling point. This is due to the likelihood of lower official rates expected later this year, which would force the Australian dollar to drop.

The latest data from the Australian Bureau of Statistics indicated that the Consumer Price Index rose 0.5% over the third quarter of 2015, a 1.5% improvement from last year. The data was under the RBA’s core inflation target band of 2% to 3%, suggesting sluggish economic growth for the country.

"The CPI read confirms that inflation is not only a secondary issue to growth, but also an opportunity to further stimulate demand in the economy. The RBA now has data on its side, and there is real downside risk to economic growth - and jobs - if it doesn't move to cut interest rates,” Esho commented.

"The lower currency has not caused any foreseeable inflationary pressures, which means the RBA can push further in jawboning. With China having rate cuts on the weekend, the door for the RBA is now well and truly open for more cuts, to drive down the currency, without worrying about runaway house prices.”

Esho further stated that if the Aussie dollar does move to the US$.70 range—where there is resistance—the RBA will have to intervene and go another 25 basis points.

“They need to maintain an element of surprise and even though the recent minutes didn’t indicate an imminent cut, a November cut is probably a higher chance than what the market is signally and I would be a seller of the Aussie dollar anywhere above the US73 cent range,” he remarked.
 

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Thursday, Sep 21, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords