Melbourne Cup Day is known to be a day of rate changes and this year has proved to be no different with the Reserve Bank of Australia yesterday announcing a cut in the cash rate to 0.1%. And they’ve promised to hold it there for three years. This is unheard of!
These actions are being taken in a bid to stimulate the economy on the back of the impacts of the Coronavirus locally and globally.
Given the second wave of the pandemic that is hitting Europe and the US and the escalation of lockdowns overseas, it is imperative that the RBA do whatever it takes to get bank interest rates down to encourage borrowing and consumption. This, in turn, should help business investment and job creation.
We’re doing a much better job of managing the pandemic locally, and we’re taking decisive action to stimulate the economy. Let’s hope this continues and that the actions have the desired effect.
Lenders review rates independently of RBA so we’ll have to wait and see what cuts they pass on and when.
What do you think of the RBAs announcement yesterday? Will it have the desired effect?
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