This Thursday, the Reserve Bank Governor will indicate how well the economy is going or not going by announcing whether we will see another interest rate cut.
But beware if you think that interest rates may decline again. Recent updates are starting to show that some areas of the economy are experiencing inflation, namely in construction and accommodation and that, coupled with petrol prices starting to move, means all areas of the economy will ultimately move as a consequence.
Another concern of lowering interest rates could be the impact on the housing market, with any lowering likely to fuel demand, although to be fair the last interest rate cut in March did come on the back of a rising house market.
So in a situation where the economy is showing signs of growth, it doesn’t feel right to cut interest rates any further.
We are picking no interest rates cut this time despite the Reserve Banks strategic plan, indicating that we would at least see one more in the balance of its financial year.