RBA minutes suggest further rate cuts are unlikely

The minutes from the latest Reserve Bank of Australia (RBA) board meeting have been released today (August 21st) and they suggest that interest rate cuts are unlikely in the near future.

According to the report, the board members were happy with levels of economic growth in Australia and China – the country's main trading partner – therefore further rate reductions were unnecessary.

The RBA lowered the national cash rate to 3.5 per cent earlier this year and it felt that this had already made a positive impact by encouraging people to take on credit or mortgages.

Although some economists are adamant that another adjustment will be made by the end of the year, the central bank is unlikely to take any action unless there is a sudden downturn in the global economy.

However, with all the problems being reported in the eurozone, the RBA may be forced to move sooner than it would ideally like to.

Commonwealth Bank chief economist Michael Blythe said: "There's certainly nothing there which suggests they are ready to pull the trigger again, we're in that kind of wait-and-see phase.

"There is still that big offshore uncertainty, which suggests that if they are going to change rates soon it's still more likely to be down than up."

Aussies who have mortgages or loans will be disappointed that even more rate cuts are not on the horizon, but we should be thankful that the national cash rate has fallen by as much as it has in the past year.

It is hard to imagine how badly people would be struggling at the moment had the RBA not slashed the cash rate from 4.75 per cent in November 2011.

Figures recently released by the Australian Bureau of Statistics suggested that Aussies have reacted to the drop by taking out personal loans in greater numbers.

The demand for finance was up by 1.9 per cent in June 2012 in seasonally adjusted terms, which is a clear indication that people are starting to become a little more confident about the state of their finances.

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