At its first meeting for the year, the Reserve Bank unsurprisingly announced that the official interest rates would be cut to a new 60 year low falling by 0.25 percent from 2.50 to 2.25 percent.
The Bank’s decision reflects concerns over deteriorating economic activity over the past 6 months. Lower interest rates have been implemented to stimulate a weak economy and restore consumer confidence. The decision clearly recognises that Australia can no longer afford to maintain cash and fixed-term interest rates about the low levels applying in other major economies.
Following the reduction, financial markets and investors are anticipating a further 0.25 per cent fall in the official rate to 2 per cent. However at this stage, there’s little speculation on the further cuts but other major countries such as Europe, Japan and even the US have been operating with rates below 1 per cent for several years.
For more information on how interest rate cuts affect you and your mortgage or other investments, contact us on 02 9299 7044.