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RBA reveals November cash rate call
The Reserve Bank of Australia has announced its decision on the official cash rate for November, amid speculation the next rate reduction will be in February 2020.
RBA reveals November cash rate call
The Reserve Bank of Australia has announced its decision on the official cash rate for November, amid speculation the next rate reduction will be in February 2020.
Despite the Federal Reserve reducing their official rates to between 1.5-1.75 per cent, the central bank has not lowered the cash rate domestically, holding at 0.75 per cent.
In the lead-up to today’s decision, comparison site Finder had surveyed 45 of the nation’s leading economists and commentators, and found a majority expecting a rate cut to be held off until February next year.
ANU’s Alison Booth was not surprised by today’s announcement, believing the Australian economy was strong enough to hold at its current rate.
“Interest rates have just been lowered and I don’t think the fundamentals yet warrant any further change.”
Becoming more bullish on the economy was AMP Capital’s Shane Oliver, who believes the market is currently having a gentle upswing.
“While September quarter inflation was low and economic data has generally remained soft, recent RBA commentary highlighting a gentle upturn in growth and greater tolerance for low inflation suggests a lack of urgency to ease for now.”
Finder’s survey has foreshadowed even lower rates in the future, with 64 per cent of economist predicting a rate cut in 2020.
Graham Cooke, insights manager at Finder, said despite the rate falling from 1.50 per cent in May to a predicted 0.50 per cent by February 2020, the general consensus is that the RBA’s cuts have had little impact thus far.
Fears of a recession
While further rate reductions won’t inspire the markets with confidence, 69 per cent of economists commented before today’s result saying a recession is unlikely or very unlikely.
However, consumers are not as confident, with 50 per cent expecting a recession within the next 12 months.
Experts and economists have noted this worry and, as a result, more than half of them (56 per cent, 17 out of 27) think households are holding back on spending in fear of recession.
Mr Cooke said there is recession talk at large, both domestically and internationally.
“While slow wage growth and underemployment seem like cause for concern for consumers, Australian economists can see the light at the end of the tunnel.”
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