 Predictions of futher interest rate cuts
Will official interest rates fall as low as 3.75 per cent? NAB chief economist Alan Oster is forecasting consecutive cuts of 75 basis points, followed by 50 basis points, then 25 basis points by March 2009.
This latest forecast for interest rates, is in response to falling business confidence, which has reached its lowest point since the NAB monthly survey began just over a decade ago.
Similar cuts in mortgage rates would shave another $287 off monthly repayments on a standard variable loan of $300,000. Recent interest rates cuts by the Reserve Bank of Australia (RBA) add up to 2% and currently the official rate is 5.25 per cent. Lenders and banks have passed on most of the cuts to home owners, but not all. There are some forecasters that predict standard variable mortgage rates may come down to 6.5 per cent by late 2009.
Prime Minister Kevin Rudd has said in Parliament that he wants to protect jobs and is prepared to spend the surplus to stimulate the economy.
"I regard war on unemployment as the Government's highest priority," he said.
"The Government remains determined to take whatever action is necessary for the future in order to support the economy, to support growth and to support jobs."
ANZ also predicts big cuts to rates, tipping the RBA will be forced to drop official interest rates to a low of 3.5 per cent by late 2009 to boost spending and avert a full-blown recession.
Interest rates in the UK and USA, as well as much of Europe have all been cut in recent months also.
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