Door open for February interest rate cut

Door open for February interest rate cut

Posted on Wednesday, January 23 2013 at 3:05 PM

The release of today’s underlying inflation figure leaves the door open for the Reserve Bank of Australia (RBA) to cut interest rates in February, according to a leading economist.

Morgan chief economist Stephen Walters says the inflation rate or 2.4 per cent provides
“accumulating evidence that domestic demand remains soggy”.

inflation tracking along the bottom half of the RBA’s two to three per cent
target band provides officials with the ‘excuse’ to push the cash rate deeper
into accommodative territory,” Walters says.

Gross, director of advisory firm National Property Research, isn’t convinced
any further cuts will have an immediate impact on the property sector.

think our greater leads will come from watching what happens in retail
spending,” Gross says. “I think we’ll see what happens with the new homes
construction data and I think the stockmarket is a much better indicator.”

believes the flow on effects of any rate reduction will take longer to filter down
to property.

 “The interest rate fall will probably
have a bigger impact on people’s capacity to spend. That’ll help stimulate the
economy to create more confidence and then we will see that flow into the
housing market.”

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