At its meeting earlier this week, the Reserve Bank of Australia Board lowered the official cash rate by 25 basis points, to sit at a record-low 2.25 per cent which will be in effect from 4th February, 2015. The interest rate has been on hold at 2.5% since August 2013.
The cash rate has been stable for the past year and a half, however the board today judged that a further reduction in the cash rate was appropriate and should add further support to demand. This should foster sustainable growth and inflation outcomes consistent with the target.
The decrease in interest rates will allow young people to have cheaper mortgages, thereby giving them a chance to become homeowners.
Nathan McMullen, head of product and digital at RAMS predicted the interest rate cut. He said that with consumer confidence and inflation low, the Reserve Bank would cut rates to help boost the economy and depreciate the Australian dollar.