Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

 

 

Invest

RBA hands down rate decision on cup day

  • November 03 2020
  • Share

Invest

RBA hands down rate decision on cup day

By Cameron Micallef
November 03 2020

The Reserve Bank of Australia has announced its decision on the official interest rate this month, following predictions of a potential cut to rates.

rba hands down rate decision on cup day

RBA hands down rate decision on cup day

author image
  • November 03 2020
  • Share

The Reserve Bank of Australia has announced its decision on the official interest rate this month, following predictions of a potential cut to rates.

rba hands down rate decision on cup day

 Following an out of cycle rate reduction in March, the RBA has followed market consensus and reduced the official cash rate to 0.10 per cent.

AMP chief economist Shane Oliver correctly predicted the RBA would cut rates prior to the announcement.

"The RBA’s own forecasts show that it will not achieve its employment and inflation objectives over the next two years and so further easing is required to help address this. Recent RBA commentary has provided a strong signal that further easing is imminent. We expect this to take the form of a rate cut to 0.1 per cent and broad-based quantitative easing."” said Mr Oliver.

Bankwest Curtin Economics Centre director Rebecca Cassells said the RBA’s cut signals its intent to further support the economic recovery by making borrowing as attractive as possible for households.

Advertisement
Advertisement

“Low inflation figures will tip the RBA’s decision to cut rates and we may also see additional quantitative easing over the coming months if progress towards the RBA’s 2-3 percent inflation target is viewed as too slow”, she said.

“Now that Victoria can add its strength, the pace of economic and job recovery should pick up substantially in the coming weeks and months. Whether this pace will deliver a full recovery of jobs lost plus additional employment and wage growth remains more possible than probable at this time.".

Tom Devitt, Housing Industry Association noted Australia’s inflation rate was well below the RBA’s target as well as the high rate of unemployment.

“The risks for the economy are highly asymmetric, with the costs of doing too little likely to be far greater than the costs of doing too much,” he said.

“The RBA’s balance sheet expansion is also significantly behind that of other central banks. This is putting upward pressure on the Australian dollar, weighing on exports and potentially turning consumers towards imports rather than domestic goods and services."

IFM Investors chief economist Alex Joiner said while the RBA has been signaling that it is considering easing policy further, the economy needed fiscal support or modern monetary policy.

The RBA has strongly signaled it thinks it needs to do more to support the economic recovery. Cutting the cash rate alone won't be enough though as a 15bp reduction won't do much, it will be part of another package from the RBA that will likely include a broader effort on quantitative easing as a minimum," he concluded.

RBA hands down rate decision on cup day
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

About the author

author image

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

more on this topic

more on this topic

From the web

Recommended by Spike Native Network

More articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.