Rate decision could be undermined by Budget

The RBA’s rate cut decision could be overshadowed by the release of the Budget, it has been claimed

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The RBA’s rate cut decision could be overshadowed by the release of the Budget, it has been claimed.

At its meeting today, the Reserve Bank cut the official cash rate to a new low of 2%. But 1300HomeLoan managing director John Kolenda said any stimulus delivered by the cut could be undermined by the release of the Federal Budget.

“With so much uncertainty about what will be delivered by Treasurer Joe Hockey in next week’s budget, this latest rate cut may not give the domestic economy much of a boost,” Kolenda predicted.

Kolenda said the RBA’s decision to cut rates may have been ill-timed in light of the Budget release, given uncertainty over the government’s fiscal position ahead of the release.

“The RBA may have been better off hanging on for another month and assessing the impact of the budget,” he said.

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