RBA could cut official cash rate: Chris Caton

RBA could cut official cash rate: Chris Caton
RBA could cut official cash rate: Chris Caton

The Reserve Bank of Australia could cut the official cash rate if banks raised their mortgage rates several times, economist Chris Caton has suggested.

So far this month, Westpac Banking Corporation, ANZ Banking Group and Commonwealth Bank of Australia have raised their mortgage rates by 0.14 to 0.16 percentage points citing increases on offshore funding costs.

The Reserve Bank of Australia has held the official overnight cash rate at 1.5 per cent for 25 months.

Dr Caton, a retired former chief economist with BT Financial group, told the Australian Institute of Superannuation Trustees conference in Cairns could cut the cash rate.

"Of course if the banks raised their variable rates again and again and the Reserve Bank was unhappy with that it would offset that – it would.

"There's no question about that.

"But at the moment I think they're thinking, 'we're low enough, we've been low enough for long enough, we really don't want to cut any further, there is no case to raise, unemployment's coming down, growth's OK, let's keep it where it is."

Dr Caton said he didn't expect a housing crash," Fairfax Media reported.

Dr Caton said there are no bargains out there for investors in either housing or stocks "in part because interest rates have been as low as they have for as long as they have. But I don't see any risk of any crashes either". 

Tags: 
Rba Rate Decision Home Loan Rates

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