Is the Market ready for a Rate Cut?

An interest rate cut is eagerly anticipated by business owners and investors as it will lower their borrowing costs. Is this the answer of all the problems that we're waiting for?

The Reserve Bank of Australia could have cue cards on their hands about the interest rate cut with the inflation forecast. The RBA has an inflation target to 2-3% and consumer prices rose 0.6% during the July-September period. According to CommSec economist, Craig James, “If the European Summit is enable to provide a definite solution to the sovereign debt crisis, then it looking likely that Reserve Bank will move to shore up confidence and provide stimulus by cutting rates by 25 basis points on Melbourne Cup Day.” The Melbourne Cup is stated on Nov. 1 and maybe this influenced RBA for looking straight the interest rate cut and helped them decide. Apart of the statement of Mr. Andrew Robb, an opposition Finance Spokesman, “Any reduction in Interest rates next week would give some welcome relief to households feeling the strain of mortgage stress and the many businesses struggling in a two-speed economy.” Many investors, business groups and industry groups believe that there is an interest cut rate next month and predicting to have continuous cut rate and Australian dollar could lose yields for investors if interest rate will cut.