Rate cut on the horizon
Official interest rates are likely to hit a new low of 1.75 per cent, on the back of recent consumer price index results, RateCity analysis showed.
RateCity money editor, Sally Tindall, said the chances of a budget-cut were more likely than not, if national and international economic indicators were anything to go by.
"The RBA [Reserve Bank of Australia] has held an easing bias since October and Australians should get set for a rate cut, if not this month, then within the following two months," she said.
"Inflation is now at 1.3 per cent and core inflation at 1.55 per cent, which is undeniably below the RBA's own target rate."
Tindall is confident that the RBA will have little choice but to cut rates, finding it difficult to ignore the inflation rates well under target; whether banks will follow is another question.
"If the RBA does deliver a cut, the big question for mortgage holders on Tuesday won't be around the budget, but whether the banks will pass this savings on," she said.
"With the cash rate decision set to be announced hours before the Federal Budget...the RBA may opt to wait and see if there's a post-budget bounce in confidence."
AUTHOR
Hope William-Smith
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