Borrowers banking on February rate cut

by Adam Smith01 Feb 2012

Borrowers are anticipating yet another rate cut when the RBA meets next week, echoing the sentiments of most economists.

A Loan Market survey has found two-thirds of respondents believe the Reserve will once again take the knife to rates when it meets on February 7. Thirty-nine per cent are forecasting another 25bp cut, while 27% expect a deeper 50bp cut. Loan Market COO Dean Rushton said still more needs to be done to stimulate the economy following the RBA's successive rate cuts at the end of last year.

"The RBA lowering rates in November and December last year was an appropriate course of action which was a welcome relief for borrowers and struggling sectors such as retail, but there are no signs of an improvement in the current global economic environment, particularly the volatile situation in Europe. While the fundamentals of the Australian economy remain quite strong and consumer sentiment has improved, sections of the economy can benefit from the stimulus provided by more interest rate cuts," Rushton said.

The question remains, however, whether an RBA cut would see immediate benefits for consumers. NAB chief executive Cameron Clyne has added to the chorus of bankers flagging bank inaction following the next RBA cut, telling radio station 3AW there was "no correlation" between the RBA cash rate and the bank's cost of funds.

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NAB denies correlation with RBA moves


  • by JERRY gIBB 1/02/2012 11:09:08 AM

    It is a mystery to me why after at least 30 yrs that when the reserve cut or put up rates the Banks followed suit. Suddenly 2011/2012 we are told by the greedy banks that if the reserve takes such action we should not expect the banks to follow. As rates go down does this mean when the cycle changes , which it will the banks will not pass on the full increase to the poor old consumer. If anyone believes this then they are on a different planet. Gillard and Swan wake up to yourselves and pull these organisations into gear and protect the consumer you are very good in championing their cause on everything that makes little difference to our pocket, for an example the new NCCP laws. Get tough with this industry or are you happy to see their profits continue to grow at the consumers expense under the guize of cost of funds.