Home News Rate cut might not do much for the economy, finance expert says

Rate cut might not do much for the economy, finance expert says

Font size :

With most marketers and economists positive that a rate cut by the Reserve Bank is imminent, it is hard to say whether it will make a positive difference in economic growth or inflation. That is according to The Sydney Morning Herald columnist Michael Pascoe.

“There is no evidence of any business holding off an investment decision in the hope of a 1.5 per cent cash rate,” he wrote. “There is evidence that non-resources business conditions are actually quite strong, that hiring intentions are picking up and that the availability of credit and the price of that credit are rather good.”

Pascoe also pointed out that consumers now seem immune to monetary stimulus. Instead of securing more money to spend due to the interest rate cut, home loan borrowers are choosing to pay off their loans more quickly. On the other hand, retirees now have reduced ability to spend as they receive lower interest on their savings.

While it could help those who want to get a bigger mortgage, not a lot of people will benefit from it given the unaffordability of the property sector. According to CBA chief economist Michael Blythe, “There is a respectable line of argument that further rate cuts may not help. And that cuts may just add fuel to the housing market.”

To conclude, Pascoe believes that the RBA rate cut will not help Aussies much. 

“Another rate cut won’t turn around the low inflation numbers or push our GDP growth any higher. We’re a low inflation country in a low inflation world. The RBA can’t change that,” he said.

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

Mortgage applications drop in second quarter Mortgage applications drop in second quarter

This marks the “beginning” of a downward trend, says Equifax executive Read more

To break monopoly, many smaller lenders could become banks To break monopoly, many smaller lenders could become banks The proposed change could break the Big Four’s monopoly over the mortgage market and help families get cheaper home loan rates ... Read more

Borrowing against the home: A strategy to pay for aged care Borrowing against the home: A strategy to pay for aged care Such debts can generally be divided into long-term and short-term loans ... Read more

NAB slashes growth forecasts for houses, units NAB slashes growth forecasts for houses, units Numerous factors, including tighter credit rules and the growing supply of new stock, have reined in Australia’s seemingly unstoppable housing market boom ... Read more

More mortgage news and articles

Sponsored Links

Saturday, Jul 22, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • 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