Interest rates are almost certain to be cut on Melbourne Cup day, according to a Yahoo!7 Finance poll of financial commentators and experts.
The slowdown in inflation to its lowest level in nine years is said to be the main reason behind the all but confirmed rate cut.
With that said, a look at our expert's predictions reveals a Cup day rate cut firming as the clear favourite. (More From Yahoo!7 Finance: Highest Paying Jobs in Australia).
One of Australia's leading finance and economics commentator with 37 years experience predicts:
Rate Rise: 500-1 (long shot)Rate on Hold: 2 to 1 (possibility)
Rate Cut: 1 to 2 (strong favourite)
Rates decrease is unbackable thanks to the the dramatic track work by the core inflation rate this week, recording just 0.3 per cent in the September quarter. That removes any excuse for trainer RBA maintaining "mildly restrictive" reins, thus jockey Martin Place will let his mount Monetary Policy have his head with neutral reins after a 25 point easing. RBA would like Monetary Policy to continue racing with plenty in reserve in case the course turns into a jumps track, but will wear the quarter percent. (More From Yahoo!7 Finance: Highest Paid American And Australian CEOs).
One of Australia's leading business and financial commentators and founder of the Switzer Super Report predicts:
Rate Rise: 1000-1 (no chance)Rate on Hold: 50 % chance (even money)
Rate Cut: 6 to 4 (don't rule it out)
So will the RBA cut on Cup day? Let's do the form. First, underlying inflation is in the target band and at the lower end. Export prices such as iron ore are falling. China, our key customer, is growing slower than expected. Europe is heading for recession and the US has dodged a recession but will have subdued growth. Our stock market is down solidly for the year and business as well as consumer confidence are improving lately but are still down both on an annual and a quarterly basis.
Given our high rates are based on scenarios which are largely the opposite of what has happened, a rate cut on Cup day should be a short odds on favourite. However, we have a problem with the jockey — the RBA boss Glenn Stevens. He rides to his own instructions after the one-time trainer — the Treasurer — made the RBA its own man. This puts the rate cut at even money but it is good to see the tipsters such as Westpac and the NAB predicting a Cup day cut. (More From Yahoo!7 Finance: Monster Billionaire Mansions).
Best selling author and director of Metropole Property Strategists predicts:
Rate Rise: 300-1 (no chance)Rates on Hold: 3 to 1 (possibility)
Rate Cut: 1 to 4 (strong favourite)
The latest inflation numbers confirm that inflation is currently not an issue. This now opens the way for the Reserve Bank to cut official interest rates for the first time in 30 months next week offering home owners and business people some respite.
It's likely there will be one or 2 more rates cuts around the corner, but then as our economy starts to pick up I can see interest rates rising again in 2013. (More From Yahoo!7 Finance: Amazing And Absurd Places For Rent).
A property expert who has just released his first book, The Great Australian Dream: A Guide To Buying Your First Home predicts:
Rate Rise: 100-1 (long shot)Rates on Hold: 15-1 (slim possibility)
Rates Cut: 2-1 (outright favourite)
Australian interest rates are high by world standards and given global economic uncertainty. Inflation is under control and a rate cut is needed to stimulate the economy, take pressure off small businesses (especially retailers) and help out highly geared home owners. For these reasons I expect the RBA to cut rates. (More From Yahoo!7 Finance: Six Investing Rules From The World’s Top Investors).
Julia Lee, an Equities Analyst with Bell Direct predicts:
Rate Rise: 50-1 (long shot)Rates on Hold: 10 to 1 (possibility)
Rate Cut: 11 to 10 (strong favourite)
It's been a heavy track and the RBA has been a little bit slow out of the gates to cut rates. Other central banks such as Singapore, Indonesia & Brazil are out in front with Australia now looking to come up from behind. Not only should rates move down in November but expect another cut in December. (More From Yahoo!7 Finance: Countries With The Highest Taxes).
Yahoo!7 Finance Calculators:
10 Comments
Experts always had an excuse when they got it wrong. See what excuse they have this time.
Replywe know about X being an unknown quantity and spurt a drip under pressure. =xpurt
ReplyExperts? Yeah, okay.
ReplyNO change will be a good one. I rely on my income from a decent interest rate as a retiree and after paying 17% on my mortgage at one stage don't see an issue with current rates. I read business wants a reduction, I guess that is so they can have a grab at what the banks are currently getting. Every Month these so called experts push for a rate reduction - Why? Who do they represent?
ReplyFor Christ sake, now were taking bets on interest rate cuts.........
Reply