Rates could fall half a per cent next week

The Reserve Bank is expected to cut interest rates by up to half a per cent at the August or September board meetings. A big slowdown in consumer spending is expected to give the RBA room to cut rates. Most analysts are expecting rates to stay on hold in August and fall in September in the first of a number of rate cuts. The first cut in rates could be as high as 0.5 per cent while future cuts are expected to be a quarter of per cent each. While some banks have signalled an unwillingness to pass on rate cuts to borrowers, most are expected to pass on the first rate cut in full. Retail figures released yesterday showed a full one per cent fall in spending. Imports were also down.

Source: Herald Sun