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.”

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

House prices return to more affordable levels in mining towns House prices return to more affordable levels in mining towns

While the end of the mining boom has had a negative impact on property prices, homes in the region have become more affordable Read more

Borrowers should anticipate a possible rate hike Borrowers should anticipate a possible rate hike Some experts advise borrowers to look for a fixed loan that allows extra repayments so that they can whittle down the balance sooner ... Read more

Why choosing the right mortgage is hard for first-home buyers Why choosing the right mortgage is hard for first-home buyers Many feel overwhelmed by the sheer range of products and interest rates on offer, a new survey reveals ... Read more

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

More mortgage news and articles

Sponsored Links

Thursday, Jul 27, 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