Mortgage rate cuts are on the cards after the Reserve Bank dropped the official cash rate for the first time in almost three years.
The Reserve Bank of Australia (RBA) has cut the official cash rate to 1.25 per cent, following its monetary policy board meeting.
The central bank’s decision was predicted by most industry pundits. The shift in expectations followed RBA governor Philip Lowe’s concession earlier this month that the board would consider the case for a rate cut in June, in light of flat inflation growth, subdued wage growth and weaker than expected labour market conditions.
Among those that correctly predicted a cut was AMP Capital chief economist, Shane Oliver, who observed: “Growth has slowed, inflation has slowed well below target, unemployment looks like it is now starting to rise when it needs to be falling to get inflation back up, and the RBA has recognised all of this and moved to an easing bias.”
Most analysts are expecting the RBA’s June decision to be the first of several cash rate reductions in 2019.
Attention turns to mortgage rates – we will be closely monitoring the response from lenders as often they do not pass on the full amount to mortgage holders. It will be interesting to see what they do following the Hayne royal commission.
Please click this link to see the RBA Statement by Philip Lowe, Governor.
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