Interest rates on hold!

Economists are interpreting the latest comments made by the Reserve Bank Governor Glenn Stevens to indicate that interest rate cuts could be over - at least for the time being.

After cutting interest rates from 7.25 per cent to 3.25 per cent in just 5 months Mr. Stevens and the bank's board may now adopt the wait and see approach and watch what happens to the Australian and world economies.

John Edwards chief economist at HSBC told Sydney's Daily Telegraph that the RBA would only need to cut interest rates further if things got worse than expected.

Stephen Walters chief economist at JP Morgan stated that if things got weaker then interest rates would be cut, but if they didn't then interest rates would stay where they were, and that if there were further interest rate cuts that they would be smaller and less frequent. Su - Lin Ong RBC Capital Markets economist concurred that interest rate cuts were getting close to the end of the easing cycle, and that we would not see such large cuts in the near future.

ANZ's senior economist Katie Dean felt that the governor's view certainly suggested that the interest rate cuts would be more measured from now on and that there appeared to be a strong possibility that there would not be a further rate cut in March.

Mr. Stevens also felt that Australia was well placed to ride out the economic storm because official rate cuts were working more effectively here than in countries overseas.

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Published on February 2-rd, 2009 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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