The Lead Up To The February RBA Decision

Posted on January 24th, 2013 · Posted in News

There are just over two weeks to go until the Reserve Bank’s monetary policy committee meets for the first time in 2013, on February 5, to deliberate on the cash rate.  It currently stands at 3%.  Economists are suggesting that the RBA may wait until March to begin cutting rates, but will take a closer look at the December quarter inflation result to be released by the ABS this week.

With annual inflation expected to track well within the RBA’s annual target band of 2% to 3%,  a low quarterly inflation reading may give the RBA the green light to cut rates, depending on its assessment on other factors such as unemployment, mortgage growth and retail spending.

AMP Capital Investors chief economist Shane Oliver, who expects at least three rate cuts this year, points out that there was only one bright note in December economic data – a record number of car sales.  Overall, he says, “the Australian economy remains sub-par, particularly so given that the RBA started cutting interest rates over a year ago”.

Regardless of what the RBA decides to do, astute borrowers will be examining their current mortgage and lender with expectations that rates will fall further this year.

If you would like us to review your current lender, product and interest rate feel free to contact us for a free finance review.