I am not much of a tipster and I have never had much luck with office sweeps, but I’m confident of backing at least one winner when the race that stops the nation is run on Tuesday.
It’s looking like a pretty safe bet that the Reserve Bank of Australia will decide on Melbourne Cup day to lower official interest rates for the third time this year.
Many leading economists expect the RBA will cut its current record low cash rate of 0.25 per cent to 0.10 per cent at next week’s board meeting.
The central bank could have taken action when it met last month but it held fire so as not to steal the thunder of the Federal Budget, which announced almost $50 billion in business and personal income tax cuts to help the nation recover from the COVID-19 recession.
Since its last meeting on October 6, RBA officials have been signalling their intent to lower the cash rate again and further quantitative easing, where it makes large scale government bond purchases to inject more money into the economy.
RBA Governor Philip Lowe also set the scene by declaring official interest rates would stay low for “at least” the next three years, a telling warning.
Dr Lowe, however, has pretty much ruled out taking rates into negative territory, which has occurred in Europe.
If you have a mortgage which you have started repaying after taking a COVID-19 repayment holiday, you will probably be pretty pleased with another rate cut, depending on how much your lender passes on.
I always believe mortgage holders should be constantly seeking a better deal from their lenders on interest rates regardless of RBA moves, even if they have been on a six-month repayment holiday.
If you are still paying a variable interest rate with a ‘3’ in front of it then it’s time to take immediate action. Call your lender and ask for a lower rate or seek the assistance of a mortgage broker to get the deal done.