Will interest rates fall further in 2015?

With the Reserve Bank leaving rates on hold for all of 2014, 1300HomeLoan’s managing director John Kolenda says that we can expect them to stay low into 2015.

The last 15 consecutive meetings have resulted in no change to the current record low rate of 2.50%, Kolenda says we can expect this period of stasis to last until “well into” next year.

However, will they drop even further off an already low base?

“I’m sure we’ll see official rates kept at the current level for the foreseeable future with the possibility of the RBA taking its cash rate down if the domestic economy continues to under-perform,” Kolenda said.

“The RBA still has plenty of room to play with and if unemployment remains high and consumer and business sentiment subdued going into the New Year then we may see further easing,” he said.

For a rate cut to happen, Kolenda points to the necessity for an uptick in economic conditions. He said that a weaker Australian dollar also reduces the chance of an uptick.

He’s not the only one who thinks another cut is a potential outcome.

Australian Property Monitors’ Andrew Wilson has noted the chance for one more rate cut in the past two months of Finder’s Reserve Bank Survey, and this month he was also joined by Market Economics’ Stephen Koukoulas and David Scutt from Scutt Partners in expecting this outcome.

And Deutsche Bank economists believe that the RBA are actually set to drop by 0.5% of cuts in 2015 to a historic low of 2%.

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