6 December 2011, the RBA cut the cash rate by 25 basis points to 4.25 per cent. If passed along in full by the banks, this cut will save the average mortgage holder – with a $300,000, 25-year mortgage – about $47 a month.
It seems that the central bank has now shifted its stance to focus on bolstering domestic demand as the outlook particularly Europe turns gloomier amid the region’s sovereign debt crisis.
Some economists expect that the RBA will cut cash rate again in early 2012 as the global economic outlook dims.
Interest rate futures – one gauge of how investors view what’s coming on the rates front – are tipping the RBA’s cash rate will drop to 3 per cent by June. That view implies rate cuts at each of the RBA’s first five rate meetings in 2012 – assuming each move is 25 basis points.
Money market pricing yesterday predicted the Reserve Bank’s cash rate would fall to about 3 per cent by September, which would require a further 1.25 percentage points in interest rate cuts from the Reserve Bank.
Read more: http://www.smh.com.au/business/money-market-tips-rates-to-sink-to-3-20111206-1oh56.html