RBA minutes point to further rate cuts

The Reserve Bank of Australia (RBA) has released the minutes from its latest meeting and they suggest that further interest rate cuts may be just around the corner.

Mortgage customers and people with personal loans were disappointed when the central bank opted not to lower the cash rate when board members met on November 6th.

The RBA had already sanctioned a 25-point reduction in October, taking the official national rate down to a three-year low of 3.25 per cent.

According to the minutes, the board felt the effects from the most recent rate cuts had not yet fully filtered through and it was worth waiting to see if they would have an impact in November.

However, the report – which was published on Tuesday November 20th – also showed that future interest rates reductions are still on the cards.

"Members considered that further easing may be appropriate in the period ahead," it stated.

"At this meeting, with prices data for the September quarter slightly higher than expected and recent information on the world economy slightly more positive, the board judged that the stance of monetary policy was appropriate for the time being."

It is unclear at this stage when the RBA will make further readjustments, but it is still encouraging to see that more reductions are on the agenda.

This is especially true in light of recent comments from some economists, who warned Aussies that higher inflation forecasts have given the central bank less room to manoeuvre on interest rates.

Lower rates could encourage a greater number of Aussies to take out personal loans.

The Australian Associated Press reported last week that the demand for loans increased in September.

Figures compiled by the Australian Bureau of Statistics indicated that personal finance commitments worth $7.43 billion were made during the month, which was up from $7.24 billion in August.

Of course, even if the RBA does trim rates in December or in early 2013, people will still be reliant on the banks passing these cuts on to their customers – something they have been reluctant to do thus far.

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