Rates haven't hit bottom yet: RP Data

by Robin Christie25 Feb 2013

The RBA may have highlighted the significant effect that low lending rates have had on housing affordability over the last two years, but the cash rate may fall further still this year.

Commenting on RBA governor Glen Stevens opening statement to the House of Representatives Standing Committee on Economics, in which Stevens noted that lending rates “have fallen to be not far from their historic lows”, RP Data head of research Tim Lawless stated that rates still may not have hit the bottom of the cycle.
“It’s not surprising,” he said of the RBA’s position. “We’ve seen house prices stabilise, we’ve seen some improvements in confidence now.” He noted, however, that labour force participation figures were likely to be an important factor in interest rate decisions going forward. 
“We see that rate of unemployment getting up around the high fives or low sixes – that’s probably a good reason to bring rates down another 25 basis points. But I think we won’t see any more than a 25 [basis points] cut from here onwards.”
He was quick to add, however, that the economic outlook changes so quickly in the current volatile environment – with news from China and the US, for example, playing a big role – that he could change his tune over the coming months.