Cash rates to remain on hold until November: JP Morgan’s Stephen Walters

The Reserve Bank will leave the cash rate on hold at 2.75% until November, according to JP Morgan chief economist Stephen Walters.

Walters believes the dollar is key to the RBA making its next cash rate cut decision.

In newly published research, he expects the Australian dollar’s return to parity against the US dollar – making it harder for industries like manufacturing, tourism and retail – to be competitive will force the RBA to take the cash rate to a new record low of 2.5%.

As highlighted by other economists, Walters says tomorrow’s official capital expenditure figures will provide insights into the health of the overall Australian economy.

He also anticipates the unemployment rate rising while expecting GDP to be only 2.75% next year, reducing his earlier forecasts of 3.25% economic growth in 2014.

The latest Bloomberg survey has 10 out of 21 economists forecasting a cash rate of 2.5% in the final quarter of 2013 with Westpac’s Bill Evans tipping a cash rate of 2.25% and the remainder anticipating now rate cut this year.

Only two economists – Westpac's Bill Evans and AMP Capital's Shane Oliver – expect a rate cut in June.

Yesterday Citibank cut its five-year fixed-rate home loan to 5.35%.

These are the current lowest fixed and variable rates (as of May 28):

Lowest variable rate offerings:

Provider

Loan name

Rate

Comparison rate*

State Custodians

State Custodians Peak Performance Offset Home Loan

4.74%

5.11%

Loans.com.au

Blackboard special – purchases only

4.75%

4.77%

UBank

UHomeloan – refinance only

4.87%

4.87%

Lowest one-year fixed-rate offerings

Provider

Loan name

Rate

Comparison rate*

Greater Building Society

Ultimate Home Loan Package

4.74%

5.51%

UBank

UHomeloan – refinance only

4.83%

5.12%

iMortgage.com.au

iMortgage Fusion 75

4.84%

5.08%

Lowest three-year fixed-rate offerings

Provider

Loan name

Rate

Comparison rate*

iMortgage.com.au

iMortgage Fusion 75

4.94%

5.16%

Loans.com.au

Dream Loan Express Fixed

4.99%

4.93%

Aussie

Aussie Select Basic Fixed Rate

4.99%

5.22%

*A comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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