Your say: 75% chance of a rate cut today 5



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The money markets are saying loud and clear that there is a 75 per cent chance of a rate cut today, and that is troublesome for many over 60s. It is a challenging bet, with property markets in the eastern states at their strongest since the GFC, and equities and housing prices looking on the high side of comfortable. Will a rate cut push them even higher?

Bloomberg News is reporting that 23 of 27 economists they surveyed are predicting another rate cut today that will take Australia’s rates to a record low 2 per cent. That is below the weighted median CPI at the moment of 2.4 per cent, placing anyone who is exposed to cash based investments to significant stress. Those people are effectively going backwards for as long as interest rates and inflation stay in this juxtaposed position.

The return that will be available on cash based investments and term deposits of a maximum of about 3-4 per cent will not make for a comfortable retirement at all.

In contrast, those exposed to equity markets could be doing quite well. The Australian Sharemarket has, over the past 30 years to 2014 returned an average of 11.7 per cent despite a number of significant shocks.

What do you think another rate cut will do for the economy? Do you think we’ll get one today? Or will the Reserve Bank hold off until after the budget?

Rebecca Wilson

Rebecca Wilson is the founder and publisher of Starts at Sixty. The daughter of two baby boomers, she has built the online community for over 60s by listening carefully to the issues and seeking out answers, insights and information for over 60s throughout Australia. Rebecca is an experienced marketer, a trained journalist and has a degree in politics. A mother of 3, she passionately facilitates and leads our over 60s community, bringing the community opinions, needs and interests to the fore and making Starts at Sixty a fun place to be.

  1. A rate cut is good if you are paying a mortgage but no good if you are living off your interest of your investments.What is good for some is not good for others.This being an over 60’s site it would not bode well for us to have a rate cut.

  2. this is crazy and is harming retirees, what it is doing is pushing house prices higher and then when the rates start to rise again there is going to be a lot of people that can not repay their loans, then the market will slump.

    1 REPLY
    • IFforget the actual figures but if interest rates go up to 1& 1/2% there will be significant mortgage collapses, there are many people living beyond their means and a small rise will cripple them.

      1 REPLY
      • True Jennie, though it will still help a lot of our children and possible grandchildren get into their first home. Most are paying around $350 to $400 and in some cases more per week to rent a property, better to go towards their own home than a landlord. Of course most landlord’s are over 60 who have purchased rental properties to feather their nest egg, but I for one prefer the younger generations to benefit with the low interest rate, considering most of us were paying around 17 to 18% when we were purchasing our home. Struggle street yes, but we made it and so will they.

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