Not everybody will welcome interest rate cuts

Wednesday 25 April 2012

Article by Mozo

Latest official inflation figures have led many economists to predict that reduced interest rates are a mere formality.

While home loan customers and companies that have taken out business loans will be jumping for joy, not everyone is welcoming rate cuts with open arms.

Speaking to ABC, Alex Cook of Arcadian Private Wealth said that Aussies who have contributed to term deposits will ultimately suffer from any readjustments.

The Reserve Bank of Australia has opted to leave the official cash rate at 4.25 per cent so far in 2012, but it is widely expected to sanction at least one more reduction over the next few months.

Mr Cook insisted that older people who have used term deposits to build up a sizeable nest egg may be forced to take on more risky investments because the interest rates attached to their existing funds will be too small.

"So certainly my hope is that the Reserve Bank doesn't lower rates too much," he was quoted as saying.

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Not everybody will welcome interest rate cuts

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