04 Jun RBA cuts rates to a new record low – why?
Key Points:
- The RBA’s latest rate cut is aimed at heading off a further slowing in growth which would threaten higher unemployment and lower for longer inflation.
- Cutting the inflation target would be a big mistake.
- More rate cuts are likely to be needed ultimately taking the cash rate to a low of 0.5% next year. Ideally this will be combined with more fiscal stimulus.
- For investors it means low interest rates for even longer.
