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A third rate cut is unlikely

By Jessica Darnbrough
0

The Reserve Bank of Australia is unlikely to deliver a hat-trick of interest rate cuts when its board meets next week, according to a survey by Loan Market.

Loan Market corporate spokesman Paul Smith said a survey of the company’s mortgage brokers found 79 per cent believe the RBA will keep the cash rate at 3.5 per cent after announcing reductions in May and June.

Mr Smith said only 19 per cent of the 239 broker respondents thought the central bank could lower the official rate by 25 basis points while two per cent tipped a 50 basis points reduction.

“Mortgage holders will always be happy to see rates come down but this time it looks most likely that the RBA will be staying on the sidelines after back-to-back monthly reductions,” he said.

“The two interest rate cuts have yet to have a substantial impact on the housing and retail sectors but with other economic indicators such as inflation and unemployment, within targeted ranges, it appears the RBA is poised to leave rates unchanged.

“Consumer sentiment remains murky and difficult to project due to the European debt crisis and direction of the Australian economy. Many consumers will likely hold back spending until some resolutions appear both internationally and domestically.”

Should the Reserve Bank lower rates again next week, it will be the first time the RBA has applied three consecutive monthly rate cuts since the height of the global financial crisis.

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