What’s the next move for the “RBA”?

Interest rates set to drop! What does this mean for the Real Estate Market?

Most economists believe the Reserve Bank will cut the cash rate again on the first Tuesday of March, but that it is likely to be a tough call. Last month the Reserve Bank cut the key rate to an historic low of 2.25 per cent and many expect a cut today will take it to 2 per cent. Recent data shows cracks in the economy, particularly figures released last week showing very weak business investment intentions.

The figures show the long-awaited boost in non-mining business investment remains a long way away, with many economists scaling back their expectations for growth in the December quarter.

Weak employment, inflation and company profit figures add to the compelling argument for another rate cut. Few care to admit it, but huge property prices lie at the heart of our economy. And if there’s another interest rate cut it will only stimulate the property sector.

Since early February Oaks Property Sales Director John Tsironis has forecast a cut and said recent data only adds to his case.
“It suggests to us that the bank would see little value in waiting for further confirmation of the need for additional stimulus to the economy”.

Surprise interest rate cuts in China over the last month have also been taken as a sign that Australia’s biggest trading partner is slowing.