Rates to plunge to two per cent

The Reserve Bank will cut official interest rates to 2.5 per cent or below next year say some economists because unemployment is expected to almost double by 2010. Four hundred thousand Australians are expected to lose their jobs in 2009, raising the level of unemployment from 4.4 per cent now to more than five per cent next year and more than eight per cent in 2010. “Unemployment of 8 per cent in 2010 is on the cards. It's quite likely,” said Melbourne Business School professor Mark Crosby. Citigroup economist Paul Brennan expects the RBA to cut to a historic low of 3 per cent with unemployment rising by 300,000. The government continues to spend to stimulate the economy and was prepared to do more said the treasurer Wayne Swan.

Source: The Australian