Authors. Australia’s cash rate is at a historical low of 1.5%. So if there’s any adverse shock to our economy (for example, a large correction in house prices), the RBA would have little room to reduce the cash rate before getting to 0% – the zero lower bound on nominal interest rates.
At 2:30pm (Sydney time), the RBA announced that it had decided to slash the official cash rate by another 25 basis points to 2 per cent after having sat on its hands for the last two meetings.
You may have noticed this week that the Reserve Bank of Australia has once again cut the cash rate, this time to a new low of two per cent. If on hearing this news you secretly wondered to.
Recently, I was of the view that the RBA would need to cut 100bps from now, to a level of 0.5%, but I did so with relatively low confidence. This is why I recommended all clients to close their long interest rate positions on 17 April 2019 (when the implied yields were 1.10% for the mid 2020 ois; 1.35% on 3 year yields and the Aussie dollar was.
But the most pressing question is whether banks will pass on the full rate cut to borrowers, after pocketing more than 1 per cent of the 3.25 per cent of RBA rate cuts since 2011.
THE Reserve Bank has admitted its. and flagged it would cut interest rates next month provided inflation stays under control. Following a Reserve Bank board meeting that held the cash rate steady.
NATIONAL Australia Bank has become the second major lender to flip its interest rate forecasts, predicting the Reserve Bank will now need to slash the cash rate at least. NAB and Westpac now.
The official cash rate for February has been announced by the Reserve Bank of Australia following its monthly board meeting. The RBA board has decided to keep the cash rate at 1.5 per cent, a move predicted by most industry experts.
The RBA cut the official cash rate. has become overpriced – I struggle to see how any of them could deliver long-term market-beating returns from their current positions. motley Fool contributor.
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