Rates could fall to 2.5pc, lender predicts
02 Dec 2008 3:11 PM
SYDNEY, Dec 2 AAP - An independent mortgage broker has predicted the official cash rate to fall to as low as 2.5 per cent next year.
The Reserve Bank of Australia (RBA) cut the cash rate by 100 basis points to 4.25 per cent on Tuesday, its lowest level in six and a half years.
It is the fourth month in a row that the RBA has cut interest rates in a bid to head off the effect of slower world economic growth on an already soft Australian economy.
Loan Market Group chief executive Jennifer Nielsen said she expects more cuts to come in the new year.
"While there's universal agreement that things are going to remain tough for some time, the RBA will have little choice but to keep cutting official interest rates," she said.
"The way the economy is performing, you could see the cash rate being lowered in Australia to as little as 2.5 per cent over the next 12 months."
Ms Nielsen welcomed the latest cut, but said it would mean little if banks were unable to attract deposits.
"There is little point in ridiculously low interest rates if there are no funds to lend," she said.
