Zenith Finance Blog

RBA Finance

Interest Rates stay at 4.25%…and why I think it should go down

So once again the Reserve Bank Board have waddled out of their ivory tower to tell us the cash rate target will stay 4.25%.

And once again the RBA media release starts off talking about the world economy instead of what’s going on here in Australia. This seems crazy for a couple of reasons…

Things are tough for a lot of Australian businesses already

I see a softening from most of the industries that we deal with – in terms of their sales and a general unwillingness of consumers to spend.

Things are about to get tougher for consumers too

Banks are complaining that their funding costs are going up. Plus they have mounting pressure from shareholders to increase their returns. Who’s going to have to cover those increases in costs?

You and I, the humble consumer.

5 reasons why interest rates need to come down

I believe that there is still a number of good reasons for the RBA to reduce interest rates to help stimulate the economy:

  • Banks are increasing interest rates outside the RBA Monetary policy actions
  • Unemployment rates increasing
  • CPI inflation has declined
  • The Australian dollar has risen and remains strong
  • The housing market remains soft

This last point is really important. Real estate has always been one of the main drivers of the NSW economy. When it’s bouyant, our economy remains strong. When it’s not, well, time to get to the life rafts.

What do you think about the rate not moving down? We’d love to hear your thoughts.

And if you want to find out how it could affect you and your finances contact our team on 1300 288 874 any time.