Does the latest RBA Rate Cut mean the Economy is worse than we think?
For months leading up to the election, all the experts were talking about the need for an official RBA Interest Rate Cut and each time the first Tuesday came and went, there was no movement from the RBA.
During the Election Campaign we kept hearing about our Strong Economy and how voting for Labor would put our Strong Economy and the benefits we have gotten from it at risk.
Now on our second Tuesday since the election where the majority of Australians voted for our Strong Economy, the RBA has hit us with our second Interest Rate Cut in as many months despite no real change in the economy from several months prior to the election except for housing prices.
Yes unemployment has gone from 4.9% in January to 5.2% in May but that figure hasn't changed since the April figures so why the second Interest Rate Cut so quickly after the previous?
Whilst the Rate Cut may be good for Home Owners paying off their mortgage, this will undoubtedly cement the previous rate cuts effect and continue to drive housing prices back up even further so making it tougher for buyers trying to break into the market, not to mention those retirees relying on savings and the pittance of Interest they get will be facing an even tighter return and those businesses doing international trade as this will surely send the AUS Dollar even lower.
The RBA claims that the Interest Rate Cut has nothing to do with housing prices and on the assumption that this statement is true, we must ask Does the latest RBA Rate Cut mean the Economy is worse than we think?