Interest rate cuts 'are not inevitable'

Monday 28 May 2012

Article by Mozo

A lot of economists across Australia believe that further interest rate cuts are inevitable, but this may not be the case.

The government is keen to deliver a budget surplus in the next year, which has caused many people to believe that the Reserve Bank of Australia (RBA) will lower the current 3.75 per cent cash rate.

This would be great news for people who have taken out personal loans, provided that lenders pass any cuts on in their entirety.

Many people are struggling to cope with the rising cost of living down under and a lot of Aussies have taken out a loan in order to cover the extra expense.

However, Art Woo – a director at Asia Sovereign Ratings – told Dow Jones Newswires that rate reductions are not a foregone conclusion.

"The reality is the economy is still growing quite strongly," he remarked, before adding that it is difficult to justify lowering interest rates when the economy is performing well.

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Interest rate cuts 'are not inevitable'

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