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Will the cash rate go down again?

By Danielle Banton

April is nearly here, and with it comes another Reserve Bank of Australia (RBA) decision on the official cash rate (OCR). It has not moved since February, when it was cut to the historic low of 2.25 per cent. So will the RBA bring an Easter gift to people in search of real estate in the eastern suburbs, or is something else in store?

The possibility is open

In the March statement from the RBA on monetary policy, governor Glenn Stevens noted that in the future, further easing of the OCR could be necessary to keep growth and inflation in check. This is a change from statements in 2014, which were not as open to lowering the rate. So clearly, one cut might not be all we have this year.

If not now, come what May

In a piece published in the Sydney Morning Herald on 24 March, several interesting points were noted. It reported Citibank data that indicates confidence in a cash rate cut at the April 8 meeting had risen to 40 per cent from 36 per cent the week before.

However, far more likely appears to be a cash rate cut in May. The same data shows that 92 per cent of people surveyed think this will occur, up from 84 per cent the same time a week before.

Felicity Emmett, co-head of Australian economics at the ANZ Banking Group told the publication that she could not see why the RBA held steady in March.

“We continue to expect the next cut in the cash rate to be delivered at the April meeting,” she stated. But on the other hand, Sam White from Loan Market said in a 3 March press release that there could even be increases throughout the year.

No matter what happens, current indications suggest the cash rate will fall in May. This could have great repercussions for anyone seeking property in Double Bay, facilitating cheaper home loans. To start looking at properties in the area, contact us today.

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