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Out of cycle movements to drive rate cut

By webmaster 02 March 2012 | 1 minute read

The majors’ decision to lift rates independently of the Reserve Bank could encourage the Board to cut the official cash rate next week, a new survey has found.

According to a new survey conducted by Loan Market Group, the vast majority of Australian home owners believe the recent rate rises by lenders will drive a rate reduction.

Of the 832 people polled, 44 per cent said a rate cut was on the cards, while 27 per cent said other factors would ultimately affect the RBA’s rate decision.

“Many Australians expect the RBA to react to lenders ignoring its decision to leave the cash rate on hold at 4.25 per cent last month and independently lifting their variable rates by modest amounts,” Loan Market spokesperson Paul Smith said.

“More than 70 per cent of our respondents are anticipating a counter attack from the central bank with almost half of those surveyed expecting a strong response from the RBA by cutting the official rate.


“That would put a lot of pressure on lenders to follow suit even though they have cited the current high cost of funding and overseas market conditions as the reason to increase their variable home loan rates.

“While the fundamentals of the Australian economy remain quite strong and consumer sentiment has been improving, sections of the economy can only benefit from the stimulus provided by lower interest rates.”

Out of cycle movements to drive rate cut
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