As confidence in the economy reaches a low only seen in recessions, the Reserve Bank admits to considering a rate cut next month. The 12-year high of 7.25 per cent would most likely be cut 0.5 per cent to 6.75 per cent.
Unfortunately for home owners cuts in interest rates may not affect mortgage rates. Although Treasurer Wayne Swan has directed private banks to pass on official rate cuts to customers, most banks refuse to commit to reducing mortgage rates which are now nearly at 10 per cent.
Mr Swan said that although the economy was slowing, he rejected the possibility of a "hard landing" and said too much was being read into the weak economic figures released in the past month.
"Economic growth is slowing, but on the other hand we still have in parts of the country labour shortages and skills shortages as well."
Recent reports of falls in car sales and and a dramatic reduction in the number of job advertisements in the past month show a slowing economy. The RBA has held it's ground for now but are convinced that the economy is slowing with oil, copper and gold prices also slipping.
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