RBA interest rate cut 'courageous': Craig James
CommSec economist Craig James, the CommSec says the Reserve Bank will now sit back a few months and assess whether the super-sized rate cut actually works.
“CommSec is pencilling in another rate cut (0.25%) in August, should it be necessary.
“Forget the old stereotype of the Reserve Bank being a super-conservative body.
“This is a courageous decision by the Reserve Bank.
“Not only will the super-sized rate cut provide real stimulus, but it will also boost much-needed confidence.
“The Australian economy has been a lot like a long-distance runner.
“The long expansion has made the economy lean and mean, but it has lost muscle over time.
“Now is the time to muscle up – with the Reserve Bank implying that the economy can afford to beef up and confront the challenges that lie ahead,” James says.
Mortgage broker network 1300HomeLoan said the Reserve Bank’s decision to cut rates by 50 basis points today was the right move but long overdue.
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The 1300HomeLoan managing director John Kolenda says the 50-basis-point cut was the minimum required to boost consumer and business confidence, especially as the banks are unlikely to pass on the whole cut.
“The RBA’s decision to swallow its pride today and cut the cash rate by 50 basis points will finally make people sit up and take notice that the central bank is serious about the non-mining sectors of the economy,” Kolenda says.
“This is a good start, but the RBA will likely need to cut rates again by 25 basis points over the coming months to really deliver the economic shock treatment the economy has been crying out for.”
If banks pass on the full 50-basis-point cut, a borrower with a $300,000 loan at 7.25% over 25 years would save about $96 per month.
"If a borrower continued to repay their loan at the pre cash rate cut level, leaving the monthly savings of $96 in each repayment, it could save them $68,364 in total interest payable and may see them repay the loan two years and eight months earlier," says Mortgage Choice spokesperson Belinda Williamson.
