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Westpac analyst predicts major rate cuts
Posted 3 hours 31 minutes ago
Updated 2 hours 38 minutes ago
A leading economist is predicting more major interest rate cuts by the Reserve Bank to stimulate growth.
The RBA's official cash rate stands at 5.25 per cent, after big cuts in recent months.
Westpac's chief economist Bill Evans says he expects another reduction of at least three-quarters of a percentage point next month, and there is a strong chance of a full 1 per cent cut.
Mr Evans says household lenders' rates are no longer dropping in tandem with official interest rates, as shown by reductions in September.
"Household interest rates only fell by 0.7. Now, variable interest rates fell by 1.22," he said.
"So in other words, from the Reserve Bank's perspective, the link between Reserve Bank policy and those interest rates that really effect the economy is breaking down.
"As a result, they need to go even harder to get the desired effect." |
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