2009: Year of the cut?
Although the Reserve Bank has already brought the base rate to its lowest level since late 2001, experts are forecasting that by Easter next year, Bank governor Glenn Stevens and friends could take the rate to a level not seen since 1960.
In a poll carried out by Australian Associated Press, experts predicted that the rate could fall to 2.75 per cent by April, which could lead to an influx of low-interest home loans, cheap credit cards and car loans.
ABN Amro chief economist Kieran Davies told the news agency said that money markets are indicating that the Australian economy is slowing down considerably and that demand is on the wane; factors which he believes could pull the Bank’s hand to historic lows when measuring the base rate in 2009.
“We think the economy is contracting now. We are close to zero,” he said, adding that “they’re factoring very low rates in the rest of the world”.
Following this month’s decision the base rate now stands at 4.25 per cent, a move which has prompted major banks to rush forward to offer new low-interest home loan deals.