The Australia Interest Rate Forecast

By Author: daren cari
Total Articles: 273
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Australia interest rate forecast is dependent on the Reserve Bank of Australia. Looking at its past history, the Interest Rate has averaged 5.46 Percent from 1990 to the current 2013. An all-time high of 17.50 was recorded in January of 1990 and lowest was in May of 2013 at 2.75%.The official interest rate, which is the cash rate is charged on overnight loans. It depends on demand for and supply of overnight funds. With the global economy at a lower trend as compared to the last year, it shows signs of picking up only by next year. United States continues to show moderate expansion while growth in China has been more sustainable.

The Australia interest rate forecast also depends on what is going on in the rest of the world. Those looking for some dependable answers are in for a disappointment. The cash rate has been lowered by 125 basis points by the Board and brought it down to 3 per cent. The borrowing rates are nearer to their previous lows but there are signs of the economy responding to the lower interest rates. The investors’ portfolios are getting modified so as to higher expected returns and the asset values ...
... have risen for some. The dollar, the supporting demand and the low trend growth are all some of the decisive factors.

The low Australia interest rate forecasts are meant to cushion the economy. RBA or Reserve Bank of Australia has surely made a surprise move. Australian dollar remains at a 30 year high but the high currency is hampering the growth for the nation's manufacturers and exporters. The rate-sensitive sectors such as home-building and consumer spending have taken their time to respond to the yearlong string of decrease in the rates by the bank. We have seen the Australian dollar fell more than half a cent after the decision on the rates.

The recent years have seen Australia pumping billions of dollars to curb recession and stimulate the spending power. But the government is already facing a 17 billion Australian dollar deficit in the current fiscal year. This is a big dilemma for the RBA. Sectors like tourism and retail are still weak and country's dominant resources industry is expected to peak earlier than expected. The Australian consumer is expected to spend more money abroad, trying to take advantage of the favorable exchange rates. The Australian economy seems to be repositioning and trying to get normal in global terms.

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