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Rate cut won't boost spending

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If the RBA cuts rates before Christmas a majority of Australians will save rather than spend, a new survey has found.

According to a poll by Loan Market Group which asked: ‘How would you react to a rate reduction by the RBA in November?’, 55 per cent of respondents said the extra money would go towards mortgage repayments.

Loan Market chief operating officer Dean Rushton said 17 per cent of the 460 respondents said they planned to increase their savings while only 16 per cent believed it would boost their Christmas budget.

He said 12 per cent of the people who took part in the online survey said a rate cut would make no difference to them.

“There’s obviously a strong outlook and evidence for the RBA to reduce the current cash rate of 4.75 per cent at the November board meeting,” Mr Rushton said.

“The deteriorating global economic environment as well as the sluggish domestic economy outside of the mining boom is the catalyst for the anticipated rate cut.”

Mr Rushton said the survey results showed that consumers remain cautious and even an initial rate reduction may not be enough to break the shackles.

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