RBA cut growth forecast to 1.5%
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The RBA today announced a cut to the growth forecast to the end of December of 1.5%, this is down from the IMF forecast of 1.8% and the 2% forecast only in August.
The RBA announcement was in the November Statement of Monetary Policy. The RBA also forecast a drop in the inflation rate to 3% by the middle of next year.
It would seem the RBA statement further vindicates future cuts to the RBA rate. The interbank futures are already factoring in a forecast RBA rate of around 4% and various investment bankers expect the RBA rate to fall to 4% by the middle of next year.
Aussie cut rates to 7.65%
Aussie Home Loans have again trumped the major banks by dropping their rate by 0.40% in addition to the cut of 0.50% last week that takes standard variable rate to 7.65%.
John Symonds also unveiled the basic variable rate loan that is below 7% at 6.99%. John Symonds proclaimed the cut as a win for consumers as rates are now on offer below 7%.
The Aussie Home Loans rate changes come into effect from 10 November.
Read the full Media Statement on the Aussie Home Loans site.
Poll - How low with the Reserve Bank of Australia rate go in 2009?
The Australian Bank Watch site has created a new webpoll to see where our visitors think the Reserve Bank of Australia’s interest rate will be at the end of 2009?
The RBA has acted swiftly in recent months in response to the growing global credit crisis and in October cut rates by a surprise 100 basis points.
The RBA followed suit again on Melbourne Cup day, the 4th November, delivering another 75 basis point cut to take the rate cut in the last two months to a massive 175 basis points.
This sizable cut reflects the genuine concern the RBA shares with regard to not only the health of the global economy but it’s effect on the domestic economy and domestic consumption.
Already unemployment has shown signs of rising, consumer spending has slumped, the AUD had been smashed and the the previously unstobbable commodity boom has slowed considerably.
The RBA have indicated a likelyhood of further cuts but are also tempered by inflation and any interest rate cuts will be impacted upon by the inflation rate that with be high on the Glenn Stevens mind come future rate cuts.
I am tipping an RBA rate of 3.75% by the end of 2009. It’s a bold prediction of 1.5% below current levels but I suspect this is where it will need to fall before it can stimulate the domestic economy.
What do you think? Take our poll and share your prediction or comments on the RBA rates outlook.
St George Bank cut rates by 0.62% to 7.74%
St George became the final of the major Australian banks to announce an interest rate reduction after announcing a 0.62% cut.
The rate cut by St George Bank brings it into line with the other major banks including ANZ, NAB and the Commonwealth Bank with a rate of 7.74%. Westpac have the best standard variable rate on offer at 7.71%.
The St George Bank change takes effect from 14 November, the same as the ANZ Bank.
Commonwealth Bank cut rates by 0.58%
The Commonwealth Bank announced on 4 November they are cutting rates by 0.58% effective 10 November 2008 after the Reserve Bank cut interest rates by 0.75% yesterday in response to the declining domestic economy.
The Commonwealth Bank rate will change from 8.32% to 7.74% from 10 November.
The Commonwealth Bank declined to pass on full RBA rate cut citing ongoing rises in funding costs over recent weeks as the reason they could not deliver the full rate cut.
The Commonwealth Bank Complete Home Loan has also reduced from 7.62% to 7.04% for customers on the wealth package with a $250,000 or greater loan.
The Media Release can be read on the Commonwealth Bank site.