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Interest Rate Cuts Boost Economy

Overoptimistic economic opinions are misguided as there were “heaps of stimulus” in the pipeline from the reductions in income tax from the federal government and the two interest rate reductions from the Reserve Bank. In his recent business outlook study, Deloitte Access Economics partner Chris Richardson claims individuals misinterpreted the RBA’s interest rate reductions in June and July and the central bank could have done a better job of communicating the reasoning.

The RBA wished to generate more employment and increase salary development instead of being worried about a sharp economic downturn, says the Canberra-based economist. Richardson suggests that while there are challenges from a slowdown in consumer spending, low salary development, and a global trade downturn, Australia has “heaps of stimulus and it’s arriving quickly.”

“The election result decreased policy uncertainty, there are large tax cuts hitting pockets in a couple of weeks, there are interest rate cuts, plus lower pressure on bank financing expenses, loosening regulators ‘ noose on residential lending, plus a modestly lower Australian dollar,” he claims.

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