Pressure Growing For Interest Rate Cuts

The economy has taken another hit as the Australian dollar dips below US83¢, mounting pressure on the Reserve Bank to consider dropping the interest rates below 2.5%.

Economists have been pushing for monetary easing after GDP figures showed a soft economy as income growth has grown by a snail’s pace. The economy has expanded by a measly 0.3% for the third quarter – below the standard of 0.7%, taking the annual growth rate to a disappointing 2.7%.

Read more about this on the Zee News website.

Shift In Interest Rate Predictions For 2015

Economists have been nearly unanimous in predicting interest rate hikes for 2015 earlier this year – but that is about to change, as the slow growing economy might force the RBA to go the other way around.

With the Australian dollar plummeting to a four and a half year low and a slow gross domestic product growth, more bank economists are convinced that down is the way to go. Goldman Sachs recently changed their stance for next year, becoming the latest bank to shift their monetary predictions. Deutsche Bank recently predicted a 50 basis point reduction, dropping the interest rate to 2% for 2015.

Read more about this on the Sydney Morning Herald website.

Are Interest Rate Cuts Ahead For 2015?

The RBA is expected to go through the last meeting of the year with no surprises, as it is expected that the official cash rate will remain at the historic low of 2.5%. Despite previous predictions of a rate hike in 2015, more people are convinced that rate cuts are ahead, as the economy shows signs of weakness to end the year.

Bank based economists are still convinced that rate hikes are the way to go, but further easing could very well happen – with market economists expecting it to go as low as 2%, as the unemployment rate is predicted to peak to 6.75% in 2015.The country’s trade has also been affected as the price of iron ore has dropped to almost 50% from the start of the year.

Read more about this on the Sydney Morning Herald website.

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