Rates to fall to five per cent by Christmas

Financial markets expect the Reserve Bank to continue its aggressive interest rate cutting program and cut rates to five per cent before the end of year. In the last five weeks the RBA has cut rates from 7.25 per cent to 6 per cent. Westpac is predicting 1.5 per cent of rate cuts in the next six months. The RBA is thought to be concerned about weakening household expenditure and may be hoping to offset slower business activity by stimulating retail demand. Jobs growth slowed last month and unemployment was up. Business and consumer confidence is coming down while demand for commodities is weakening. Economists are predicting that Australia ill escape the economic recession now affecting many other countries.

Source: The Australian Financial Review