It is not only the economists that are expecting the RBA to announce a rate cut next week, most borrowers have the same expectation.
A Loan Market survey has identified that 2 out of 3 of respondents expect to see the RBA knife to rates when it meets on February 7. Thirty-nine per cent are forecasting another quarter of a percentage point cut, while 27% expect a deeper 50bp cut.
Rate cut does not only makes loans cheaper it also contributes significantly to consumer confidence and has the overall affect of stimulating the economy.
“The RBA lowering rates in November and December last year came as a welcome relief for borrowers and struggling sectors such as retail, but there are no signs of an improvement in the current global economic environment, particularly the volatile situation in Europe.
How much of the rate reduction will be passed on to holders of...