Reserve Bank keeps interest rates at 0.25% in October

Since 2016, interest rates have been reduced five times and were dropped to a historical low in March this year due to theRBA Governor Philip Lowe said in a statement today that the global economy is gradually recovering after a severe contraction due to the pandemic, but the recovery is uneven and its continuation is dependent on containment of the virus. “Financial conditions remain accommodative around the world and supportive of the economic recovery,” he said.

Labour market conditions have improved somewhat over the past few months and the unemployment rate is likely to peak at a lower rate than earlier expected. “Even so, unemployment and underemployment are likely to remain high for an extended period. Wage and inflation pressures remain very subdued,” he said.ECONOMISTS EXPECT A CUT BY CHRISTMASshowed that 40 per cent of economists surveyed expected a 0.1 per cent cut by November – but many predicted that it wouldn’t happen on Budget day.

David Robertson, head of economic and market research at Bendigo and Adelaide Bank, said the RBA wasn’t likely to announce a rate cuts on Budget day but sees one on the horizon. A lower cash rate means borrowing money is cheaper, which is good news for people with mortgages – but many economists believe it isn’t enough to make a significant difference on the national economy.“The cash rate has dropped by 125 basis points over the last year and a half – a further fall of 15 is unlikely to make much of a difference beyond showing that the RBA is taking action,” Mr Cooke said.

The lowered cash rate could impact your mortgage but is not likely to make a huge impact to the economy, experts say Picture: iStockThe RBA’s Dr Lowe previously ruled out a move towards negative interest rates, and has insisted rates will remain at low levels for the foreseeable future.

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