RBA unlikely to cut rates today.

Monday 03 June 2013

Article by Mozo

Home loan owners can expect the Reserve Bank of Australia to keep interest rates on hold today according to most economists however views are now split on whether we will see another rate cut over the next 12 months.

Home loan owner undecided on interest rates

Economists are no longer unanimous on their speculation of further rate cuts over the next 12 months. Many still believe that a number of challenges still lie ahead for the Australian economy, with global issues such as the economic tension in Europe and a number of countries entering a currency war, expected to impact locally. This along with a slow down in the mining sector is leading many to the conclusion that further rate cuts over the next 12 months will be necessary to keep the Australian economy moving.

"We retain our position that the terminal cash rate will be 2 percent, with single moves in August, late 2013 and early 2014," said Westpac chief economist Bill Evans.

However, with positive signs from previous cuts beginning to show in key sectors such as the housing market, along with an over valued Australian dollar now back down below parity against the US dollar, a growing number of economists are beginning to believe that further rate cuts may not be necessary.

Despite differing outlooks on Australia's interest rates over the next 12 months, a majority believe that a rate cut  today is not likely. Just 1 of 25 economists surveyed by Bloomberg expect the RBA to cut rates further today.

Whatever the decision by the RBA today, Australians can monitor which banks have been naughty or nice in passing on full rate cuts here. Those looking to get the best interest rates for their mortgage can compare home loans on Mozo.

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