Interest Rates To Go Down?

The Announcement was made today by the Australian Reserve Bank that interest rates are on hold at 3 per cent, as most expected.

During the board meeting today, the Australian central bank decided not to cut interest rates. Most economists were expecting the cash rate to remain unchanged at a 49-year low.

The March building approvals were up 3%, which is said to have bolstered the reasons for the unchanged rate. We all know too well the approvals fall well short of demand though!

RBA governor Glenn Stevens said conditions in global financial markets remain generally “on a path of gradual improvement”.   “The considerable economic policy stimulus in train in most countries should help contain the downturn and support an eventual recovery,” Mr Stevens said.

Today’s decision may not signal the end of the rate reduction cycle, with financial markets are pricing in at least another 50 basis points worth of reductions this year depending on the data in the next six months, while it is not evident that the stimulus package has had a significant impact the low interest rates we have now provide massive cushioning to the downturn in our current “crisis” climate.

Its clear the rates are at record lows however its still a lottery whether they will fall further with many economists predicting they have bottomed out.

Time will tell….