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Interest rate cuts 'may not happen this year'
Tuesday 13 November 2012
Many Aussies were bitterly disappointed when the Reserve Bank of Australia (RBA) decided not to lower interest rates earlier this month and it seems unlikely that any reductions will be seen until the new year. Economists had suggested that despite its reluctance to trim the cash rate from its current level of 3.25 per cent, the central bank still had plenty of room to make a readjustment next month if it saw fit. However, the RBA has since revised up its inflation forecasts, which makes a December rates cut far less likely. It now believes consumer price index (CPI) inflation will reach 3.25 per cent by mid-2013, which is higher than the RBA's target of between two and three per cent. The RBA uses the cash rate to keep the CPI within its preferred boundaries over time. HSBC chief economist Paul Bloxham said: "With the impact of the high exchange rate starting to wear off on inflation, that might leave them less room to move on rates." This will come as a huge blow for mortgage holders and people with business and personal loans, but not so much for Aussies with high-interest savings accounts and term deposits. The last round of interest rate cuts came in October, when the RBA trimmed the cash rate by 25 points. It has slashed rates by 1.5 per cent since November 2011, but the nation's banks and lenders have not been as generous. Banking chiefs have cited high borrowing costs as the main reason for their reluctance to pass on the RBA's cuts in full. Take last month for example. None of the "big four" – Westpac, Commonwealth Bank, ANZ and National Australia Bank – reduced the rates on their mortgages by the full amount advised by the RBA. Some experts believe the central bank's power has been diluted of late and Aussie lenders are increasingly doing as they please. It will be intriguing to see if the RBA's board members do sanction any further changes when they meet again at the start of December. Have a question about interest rates? Ask the money gurus at Mozo Answers.
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ANZ confirms rates will remain unchanged
Friday 09 November 2012
Bosses at ANZ have confirmed today (November 9th) that the interest rates attached to the company's standard variable rate mortgages will remain unchanged. It announced the rate will stay at 6.6 per cent, while the comparison rate will not drop from 6.7 per cent. A statement from the organisation read: "Despite intense competition for business deposits, variable small business lending rates will also remain unchanged." Few people will be surprised by this move, as the Reserve Bank of Australia (RBA) opted not to slash the national cash rate when board members met earlier this week. The central bank felt there had been a big enough improvement in the state of the global economy to justify keeping things as they are. Although the cash rate stands at 3.25 per cent – its lowest point for three years – many experts still feel further reductions are needed to stimulate activity in the property sector and to encourage greater levels of public spending. Have a question about interest rates? Ask the money gurus at Mozo Answers.
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RBA decides against further rate cuts
Tuesday 06 November 2012
The Reserve Bank of Australia (RBA) has opted not to reduce the national cash rate from its current level of 3.25 per cent. Economists had expected the central bank's board to sanction another reduction when they met on November 6th – adding to the 25-point readjustment in October. However, RBA governor Glenn Stevens has released a statement in which he revealed that with the outlook for the global economy being slightly more positive of late, the board felt the current rate was "appropriate". This will obviously come as a blow to mortgage and personal loan customers across the country, but will be a relief to those who have term deposits and savings accounts. The national cash rate has fallen by 150 points in the last year, but experts in the housing sector are adamant that further cuts are needed to encourage people to get a foot on to the property ladder. Mr Stevens did not rule out the possibility of further adjustments in the near future and insisted the bank would monitor the situation closely. Have a question about interest rates? Ask the money gurus at Mozo Answers.
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ANZ chief issues warning about interest rates
Monday 08 October 2012
ANZ chief executive Phil Chronican has warned that recent interest rate cuts alone will not necessarily be enough to encourage Aussies to spend more money. The Reserve Bank of Australia (RBA) sanctioned a 25-point reduction last week, but none of the "big four" banks have passed this on to customers in full so far. Commonwealth Bank and National Australia Bank announced that they would trim the interest rates attached to some of their products by 20 points, while Westpac will only introduce an 18-point cut. ANZ is expected to make an announcement on its own rates later this week, but Mr Chronican feels that more needs to be done to boost spending levels across the nation. He told ABC's Inside Business programme that the official cash rate – which stood at 3.5 per cent until last week – was already very low. "I'm not sure there's a lot of merit in having interest rates cut as the only tool," he was quoted as saying.
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Banks get the ball rolling on interest rates
Thursday 04 October 2012
Two financial institutions have got the ball rolling by announcing plans to cut the interest rates attached to certain loan packages. Bosses at the Bank of Queensland (BoQ) have confirmed that the organisation will trim its rates by 20 points as of October 19th. This is five points short of the Reserve Bank of Australia's recommended 0.25 per cent cut, but BoQ chief executive Stuart Grimshaw said the cost of funding was still high. "We are also conscious of pressure facing all of our customers, including those with home loans and those with deposits," he remarked. Meanwhile ING Direct has revealed that it will pass the entire 25-point reduction on to its mortgage customers from October 12th. The government will be hoping that this has set the scene for other banks and lenders to start lowering their rates in line with the RBA's recent readjustment. There are growing concerns that the nation's "big four" banks – ANZ, National Australia Bank, Westpac and Commonwealth Bank – may withhold some or all of the rate cut. Have a question about interest rates? Ask the money gurus at Mozo Answers.
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Mortgage holders face anxious wait on interest rates
Wednesday 03 October 2012
Mortgage holders face an anxious wait to see if their lender will pass on the savings from this week's national interest rate readjustment. The Reserve Bank of Australia (RBA) has opted to cut the cash rate by 25 points to just 3.25 per cent, which should in theory provide significant relief to home, business and personal loan customers. However, the Herald Sun reports that there is no guarantee that the country's major banks will follow the RBA's lead by trimming their interest rates. Although it is still early days, none of the major banks have yet announced plans to pass the reduction on to their customers. Choice chief executive Alan Kirkland told the news provider: "Australia's major banks are at near-record levels of profitability, and this is no time for them to be clipping the ticket on interest rate cuts." If the changes are made, the repayments on an average $300,000 mortgage will fall by $50 a month, which could be a godsend for many households in these austere times.
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RBA slashes interest rates
Tuesday 02 October 2012
The Reserve Bank of Australia (RBA) has cut the national cash rate by 25 points today (October 2nd). Governor of the central bank Glenn Stevens said the outlook for world economic growth had weakened in the past month, which prompted the decision. Board members gathered for their monthly meeting and eventually agreed to reduce interest rates to 3.25 per cent – the lowest point for three years. Mr Stevens stated that commodity prices had dipped in recent weeks and the Australian dollar had remained stubbornly high. This was undoubtedly piling the pressure on the country's businesses and a number of organisations have been calling for a rate cut for quite some time. Indeed, earlier this week, the Construction, Forestry, Mining and Energy Union and Australian Council of Trade Unions urged the RBA to ease some of the pressure on the construction and mining sectors by trimming rates. Although leaders at the former had told the Australian Associated Press that they were hoping for a 50-point cut, the fact that the RBA has taken action will no doubt offer them some encouragement. Since November 2011, the RBA has slashed interest rates by 125 points, but this is the first time the board has introduced a reduction since June 2012. Mr Stevens added that the positive effect of recent adjustments would not be immediately obvious, but he felt that there have already been signs that the cuts have started to benefit the Aussie on the street. "However, credit growth has softened of late and the exchange rate has remained higher than might have been expected, given the observed decline in export prices and the weaker global outlook," he remarked. "The board therefore decided that it was appropriate for the stance of monetary policy to be a little more accommodative," Mr Stevens continued. Although the 3.25 per cent national cash rate will take effect from October 3rd, there is no guarantee that all of the country's banks will pass the savings on to their customers in their entirety. Have a question about interest rates? Ask the money gurus at Mozo Answers.
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Unions are desperate to see interest rate cuts
Monday 01 October 2012
Two of the country's leading unions have called for interest rates to be lowered by the Reserve Bank of Australia (RBA). The RBA's board members are set to meet tomorrow (October 2nd) to discuss whether the existing national cash rate is adequate. Currently, official interest rates stand at 3.5 per cent, having come down from 4.75 per cent since November 2011. Despite the significant drop over the past 11 months or so, a number of organisations in the construction and manufacturing sectors feel that rates are still too high. The RBA has not made any changes since June 2012, but the pressure is mounting and there is every chance that another cut will be made this week. Speaking to the Australian Associated Press, leaders of the Construction, Forestry, Mining and Energy Union CFMEU and Australian Council of Trade Unions (ACTU) suggested that urgent action is needed to give struggling businesses a much-needed boost. CFMEU secretary Michael O'Connor believes the union's pleas for lower rates have been ignored up until now.
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RBA 'has room to trim interest rates'
Tuesday 18 September 2012
The minutes from the Reserve Bank of Australia's (RBA) latest meeting have now been released and they make for interesting reading. For the third month running, the central bank opted not to lower the national cash rate, as board members deemed the existing rate of 3.5 per cent to be sufficient. This came as a bitter disappointment for many Aussies – particularly mortgage holders and business loan customers – as they had hoped for another reduction. However, the minutes have suggested that the RBA does have scope to slash interest rates in the near future should the need arise. The board stated that the outlook for the Australian economy has worsened recently and there is every chance that global commodity prices could slide drastically. Some of the nation's main trading partners – such as China – have reported poor economic data and this could weigh heavily on Australia's resources sector. The Australian mining industry has been booming in recent years, but there are fears that the whole sector will start to slow down. According to the RBA minutes, there was no need to cut the national cash rate in September, but the organisation is fully aware of the problems facing the economy. "The current assessment of the inflation outlook continued to provide scope to adjust policy in response to any significant deterioration in the outlook for growth," the RBA announced. It continued: "The board judged that, with inflation expected to be consistent with the target and growth close to trend … the stance on monetary policy remained appropriate."
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Further rate cuts are needed to boost housing sector
Monday 10 September 2012
Leaders at Master Builders Australia believe more interest rate cuts are required if the nation's housing sector is to recover. The Reserve Bank of Australia (RBA) slashed the cash rate by 125 points between November 2011 and June 2012, but has been reluctant to lower it any further in the past few months. Board members decided last week that the current rate of 3.5 per cent would suffice for yet another month, as the economy is performing relatively well. However, chief executive of Master Builders Australia Peter Jones feels that poor housing finance figures from July show that recent rate reductions have failed to boost people's confidence and many Aussies are still reluctant to purchase a property. Statistics indicated that finance for the construction and purchase of new dwellings fell by 1.9 per cent in July in seasonally adjusted terms. "If as suspected, the previous rate cuts have failed to take hold, the Reserve Bank needs to act," Mr Jones remarked. Have a question about interest rates? Ask the money gurus at Mozo Answers.
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