News

RBA paves the way for early rate cut in 2020

19 December 2019

The Reserve Bank could be laying the groundwork for another interest rate cut early in 2020.

Australia’s central bank say they will reassess the economic outlook at their first meeting next year and market economists say it could mean an early rate cut.

Minutes from the RBA’s December meeting show that updated forecasts will determine whether it cuts the official cash rate to a new record low of 0.5 per cent.

“Members agreed that it would be important to reassess the economic outlook in February 2020, when the bank would prepare updated forecasts,” the minutes said.

Westpac chief economist told Australian Financial Review this week that it’s unusual for the RBA to say that it intends to review policy settings and the outlook and that the RBA would likely cut rates if there was a deterioration in the outlook for growth and unemployment.

“Members noted that weak growth in household income continued to present a downside risk to consumer spending, and that a low appetite for risk could be constraining businesses’ willingness to invest,” RBA minutes state.

“As part of their deliberations, members noted that the board had the ability to provide further stimulus to the economy, if required.”

The RBA has said it did discuss the possibility of cutting rates again in November but has elected to keep them at 0.75 per cent since the last move in October.

Financial markets are predicting around a 50/50 chance of another 0.25 per cent rate cut by the middle of next year.

Latest

The best thing you might want to do if investing in commercial property is assemble a ‘dream team’ of experienced operators that understand the process and understand why you are investing.

Read more

Mortgage Professional Australia has announced that Perry Finance Director and Melbourne Finance & Equity Group CEO Cameron Perry is one of MPA’s Top Ranked Commercial Brokers of 2022.

Read more

Prospective home buyers and investors are being warned to temper their expectations as the dust settles on the Reserve Bank’s first interest rate rise in years.

Read more

The Reserve Bank this week pulled the trigger on interest rates as expected, hiking the official cash rate by 25 basis points to 0.35 per cent.

Read more