RBA tipped to cut rates

The RBA’s slew of rate hikes may soon come to an end, with one brokerage even going so far as to say the next rate movement will be downwards.

According to Loan Market Group’s executive chairman Sam White, the six increases applied by the RBA since October last year which lifted the cash rate to 4.5 per cent have successfully slowed economic activity.

Mr White said rates should stay on hold for the time being and the next movement by the RBA could even be a rate reduction.

“The fact that the RBA moved so early in the cycle means that interest rates are going to be on hold now for some time,” he said.

“And I think for the first time in over a year there’s a significant chance now that the next interest rate move will be downwards.”

Mr White said mortgage holders should be looking to pay more off their loans and other debts while rates stay on hold.

“Start to move it from high interest bearing debt like credit cards and put it onto your mortgages and hopefully pay that debt down as fast as possible,” he said.

However, Mr White’s predictions are in contrast with many other economists, including AMP’s chief economist Shane Oliver.

Mr Oliver told The Adviser he expects the RBA to hike rates one more time before the end of the year.

“Originally I had expected rates to hit 5 per cent by the end of the year, but we have now revised this forecast down to 4.75 per cent,” he said.
Source: The Adviser


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