Interest rates tipped to fall to new record low

Official interest rate set by the Reserve Bank will fall to 2.75 per cent by Christmas 2012, a new record low, with mortgage rates falling to about 6 per cent according to Westpac's chief economist, Bill Evans.

Mr Evans expects 0.25 percentage points reductions in June, July, August and one more by the end of the year.

In 2009, after the global financial crisis, the official cash rate fell to 3.00 per cent, and the average mortgage rate dropped to around 5.8 per cent.

“Monetary policy is too tight given the shock to confidence and fragility of the economy. Retail has lost its momentum, house prices have edged off, capital spending is quite soft excluding mining.”

Source: Sydney Morning Herald