Analysts Forecast RBA Would Cut Overnight Cash Rate to 3%
By Vittorio Hernandez | December 4, 2012 10:36 AM EST
Analysts agree that the Reserve Bank of Australia (RBA) would cut on its Tuesday, Dec 4, policy board meeting the overnight cash rate by 25 basis points to 3 per cent.
The move would bring down the key lending rate to a three-and-a-half-year low or the same level in April 2009, the height of the global financial crisis.
Economic experts said the emergency rate reduction would aim to serve as a buffer against weaker commodity prices and a slowing economy. ABC forecasts a 93 per cent chance the rates would be cut with the soft outlook for the Australian economy, flat-line retail sales and drop in company profits.
Daily Forex News had a similar outlook in the following report posted in YouTube:
Other indicators of an impending RBA rate cut are high unemployment rate and negative inflation rate.
"It is clear the economy is, in effect, treading water . . . Consumers are holding back on significant purchases," Brisbane Times quoted CommSec economist Savanth Sebastian.
"The Reserve Bank cut in October, it held off in November, and now it knows it needs to do more. If it doesn't move on Tuesday it will have to wait two more months until its next scheduled meeting in February," Mr Eslake explained to Brisbane Times.
HSBC chief economist Paul Bloxham believes the December rate cut could possibly be the last for a while over inflation rate that is slightly higher than expectation.
"What we've seen since then is a run of slightly weaker data, slightly weaker wages data, and that does open the door for them to cut one more time. What we want to look out for is the next lot of inflation data, which we get in late January and there's a good chance that it'll be solid enough that the RBA might not want to go too much further," ABC quoted Mr Bloxham.
However, ABC business editor Peter Ryan said the high interest rate in the real world in the reason why the RBA may keep cutting into 2013. He pointed out that in April 2009 when the cash rate was 3 per cent, the average standard variable rate was 5.75 per cent. With the present 3.25 per cent key lending rate, the average standard variable rate is somewhat higher at 6.65 per cent.
To contact the editor, e-mail:
Most Popular Slideshows
- ‘Sons of Anarchy’ Season 7 Finale Spoilers: Kurt Sutter On Ending The Biker Series And Picking The Right Song For The Final Ride
- Prince Charles’ Wife Camilla Parker-Bowles In Drug Scandal - Reports
- Prince Harry Kissing Mystery Blond, Cressida Bonas & Camilla Thurlow Are Distant Memory
- St. Louis Rams 28, Seattle Seahawks 26 [PHOTOS]
Join the Conversation
- Galaxy Note 4 vs Redmi Note 2 vs iPhone 6: Samsung in Danger with Depressing Q3
- iOS 8 Jailbreak Release Date Likely this October 2014 with Pangu not Evad3rs Firming Up as Creator
- Apple Inc. (AAPL) Stock Set to Soar Beyond $100 Despite Decline After New iPad Launch
- Russia Beefs Up Gold Reserves To Offset Heat of Sanctions And Undercut Dollar
- iPhone 6 vs Nexus 6 vs Galaxy Note 4: Performance and User Interface Comparison
- Fappening: Message Board Posters Belittle Nude Photo Leakers As D-Listers Seeking Publicity
- Fappening: Lindsay Clubine, Wife Of Boston Red Sox Pitcher Clay Buchholz, & George Sampson Of Britain’s Got Talent, Are The Latest Victims Of Celebrity Nude Leaks