How low can interest rates go? Will we see a New Year rate cut?

For most of 2014 financial experts have been speculating that a rate rise is in store for us in 2015, however over the last couple of weeks those predictions have been changing.

There’s now growing speculation that there will be an interest rate cut early next year, after 16 months of interest rates holding steady at the record low rate of 2.5 per cent.

At the last Reserve Bank meeting the board stated that interest rates are unlikely to change anytime soon, however there are some key indicators that could lead to an interest rate drop such as rising unemployment in the country and a cooling off of residential property growth.

The most recent official GDP numbers also show a weakening in economic growth to about 2.7% from 3.2%.

All of the above could be signs that interest rates need to be lowered to help drive spending and residential investment in Australia.

If interest rates do drop next year, the Deutsche Bank predicts that there will be two quarter-point reductions, which would bring the cash rate down to just 2 per cent.

But as we have seen with interest rate predictions in the past, things can change quickly so we will just have to wait and see what 2015 has in store for us.

What are your interest rate predictions for 2015? Will interest rate decisions affect your property choices?

Leave a Reply

Your email address will not be published. Required fields are marked *


Our site sponsors

If you're interested in becoming a site Sponsor, please contact me today and we can make a deal to promote your business here!