RATES STAY ON HOLD BUT ECONOMISTS WARN OF FURTHER RATE CUTS

The Reserve Bank has today kept the cash rate on hold at 2.75% – in line with the predictions of most senior economists in Australia, sighting the major reason as the recent depreciation of the Australian dollar against the US dollar.  TD Securities’ head of Asia-Pacific Research, Annette Beacher stated that “the six percent fall in the Australian dollar since the May Board meeting removes the urgency for near-term action.”
In an overall sense, it appears that low inflation data is providing grounds for potential further rate cuts in the months ahead. Inflation rose by a minimal 0.2% in May following the last rate cut, but was offset by low fuel prices and declines in domestic travel costs. This represents a 0.1% decrease since April, and sees the annual inflation rate approach the lower end of the target band of 2-3% at 2.2%.
Furthermore, property prices took a hit over the month, declining by 1.2% nationwide. Job ads continued to fall by 2.4%. If figures continue this way or if they worsen, we could see another rate cut as early as next month.
According to Westpac’s Chief Economists, Bill Evan “the markets are currently pricing a 76% probability that a cut of 25bps will happen by August 2013 and a 100% probability of that cut occurring by year’s end and a 75% probability of a second cut in that timeframe”.

About Port Douglas

Port Douglas real estate - Real estate in Port Douglas is now sought after the world over. Our passion for where we live stems from Port Douglas being the only place in the world where two natural, world heritage listed sites (the Great Barrier Reef & Daintree Rainforest) exist side by side. If you would like buy or live in your own piece of paradise, please browse our real estate listings http://www.realestateportdouglas.com.au The views expressed in the Port Douglas blogs are not those of Century 21 Port Douglas Real Estate nor the Century 21 franchise.
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