Could there be an interest rate cut in the New Year?

question-markThere’s been growing speculation that Bacchus Marsh homeowners will get a late Christmas present next year in the form of a cut to interest rates.

At the Reserve Bank’s last meeting for the year they announced that the official interest rate is remaining on hold at 2.5 per cent for the 16th consecutive month.

While the Reserve Bank board stated that interest rates are unlikely to change any time soon, there is a growing number of experts who believe that a interest rate cut is on the cards for 2015.

For most of this year however, financial experts have been predicting an interest rate rise for the New Year, or for interest rates to remain on hold until at least 2016.

So why are some experts suddenly saying that interest rates will drop?

There are concerns about rising unemployment in the country, as well as a cooling off of residential housing growth. The most recent official GDP numbers also show a weakening in economic growth to about 2.7% from 3.2%.

All of these are signs that interest rates may need to go lower to help drive spending and residential investment.

The Deutsche Bank agree that interest rates are likely to go down next year with two quarter-point reductions, which would bring the cash rate down to just 2 per cent.

As always with interest rates we will just have to wait and see…

What are your interest rate predictions for 2015?