RBA Rate Cuts – Cheapest Loans In 40 Years?

In its meeting today the Reserve Bank of Australia have moved to cut interest rates to 2.25% p.a., paving the way for the cheapest home loans in 40 years.

The decision was one most experts were predicting, though the majority had pegged it to occur later in the year.

Economists still agree a further reduction in rates is likely in 2015, in an effort to buoy our employment figures and continue the economic reset of the post-resources boom era.

According to RBA Governor Glenn Stevens, the Board has “taken time to assess the effects of the substantial easing in policy that had already been put in place and monitored developments in Australia and abroad.”

Stevens says the cut is expected to add some further support to demand, “to foster sustainable growth and inflation outcomes consistent with the target,” citing modest income growth and the Australian dollar, which fell steeply in the wake of the RBA’s announcement.

Political instability may also factor into the decision, with confidence waning in some areas of the economy as Canberra sees increased leadership speculation.

The Reserve Bank has to strike a balance between economic growth and growth that risks overstimulating the housing market.

Article from http://www.realestate.com.au/blog/rba-rates-february-2015/?pid=ref-buy-homepage-feature-1