July interest rate cut unlikely
A majority of economists expect that home loan owners will not see the Reserve Bank of Australia (RBA) make another interest rate cut in July, reports WeeklyTimesNow.com.au
12 of 13 economists surveyed by AAP believe that the RBA will keep interest rates on hold at the current record low of 2.75 percent when it meets tomorrow to make its decision.
When the RBA last cut the cash rate in April, the Australian dollar was sitting above parity against the US dollar, creating much strife for local businesses. Lower than expected inflation gave the RBA room to cut interest rates by 0.25 percent, almost immediately toppling the Aussie dollar below 100 US cents
With dollar now hovering around 91 to 93 US cents, CommSec chief economist Savanth Sebastian believes that the Reserve will likely wait for the release of the June quarter inflation figures, to be released July 24, before it makes another move.
"Yes, in relative terms, it has fallen [the Australian dollar] and that's a positive and a benefit and a stimulatory factor for the economy but I think, certainly, the reserve bank would want to see further improvement in terms of stimulatory measure and I think another rate cut in August may just do that for them," said Mr Sebastian.
Similarly AMP Capital economist Bob Cunneen is forecasting for another rate cut in August unless the Australian dollar should experience another sharp fall.
'The RBA should be cutting interest rates in coming months given the sedate economic activity in the non-mining sectors, subdued business and consumer confidence, as well as a sluggish labour market," said Mr Cunneen.
Despite the RBA keeping interest rates on hold, a number of lenders have independently made significant cuts to their home loan products, meaning mortgage holders could still be finding themselves a better deal. Give yourself a home loan health check and make sure you're getting the best of the current low interest rates here.
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