Home News Slow inflation pace sparks debate among experts regarding rate cut

Slow inflation pace sparks debate among experts regarding rate cut

Font size :

With inflation in Australia at its slowest pace in 17 years, experts debate on whether the data is weak enough to trigger an interest rate cut next week.

Some economists argue that the next board meeting of the Reserve Bank next Tuesday might see the official rates fall to a record low of 1.5 per cent. A rate cut would feed quickly into lower mortgage and business lending rates in the hope of sparking stronger demand across the economy and reversing inflationary trends. A continuous slowdown in inflation may pose bigger challenges over time.

However, the view that a rate cut may happen next week is far from unanimous, with bets falling from 70 per cent at the start of the week to only 50 per cent.

According to Westpac chief economist Bill Evans, the inflation report was “still consistent with a rate cut next week,” though he acknowledges that the RBA might hold it off if there was a “fundamental philosophical resistance to cutting.”

On the other hand, AMP Capital head of investment strategy and chief economist Shane Oliver believes that the inflation figures are not low enough to ensure a rate cut.

“We expect that the RBA will move again to help ensure that inflation expectations do not become entrenched below two per cent as has been the case in several other countries,” he said.

Still, other economists surmise that the RBA might delay the rate cut until the November board meeting.

“We now push our forecast for a 25-basis-point cut out to November RBA meeting,” said Citi senior economist Josh Williamson. “We expect underlying inflation to dip again and international developments and the prospects of monetary easing elsewhere will place more upside on the currency.”

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

New social housing aims to transform Ivanhoe Estate New social housing aims to transform Ivanhoe Estate

The sprawling redevelopment aims to boost the supply of affordable housing in Sydney Read more

A new suburb will be built in west Melbourne A new suburb will be built in west Melbourne Mount Atkinson will become home to more than 22,000 people over the next 15 years ... Read more

Surging house prices threaten liveability in Melbourne Surging house prices threaten liveability in Melbourne Analysts warn the city could become just as unaffordable as Sydney, if property trends continue ... Read more

More Aussies would benefit from regional hubs linked to cities More Aussies would benefit from regional hubs linked to cities Shorter commutes could spur higher home sales in regional towns, analysts say ... Read more

More mortgage news and articles

Sponsored Links

Sunday, Aug 20, 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