The consumer price index for the September 2011 quarter confirms that in recent quarters the RBA has judged monetary policy on the basis of overstated inflation figures, leaving the path clear for an immediate rate cut, says the Housing Industry Association (HIA).
“Revised CPI methodology by the ABS means that in effect the RBA has been recently targeting an inflation rate of 1.75 to 2.75% rather than its stated rate of 2 to 3%,” said HIA senior economist, Andrew Harvey.
The change adds weight to industry’s long held view that interest rates have been taken too high and leaves the RBA with plenty of room to cut rates by the end of the year, said Harvey.
“The change to recent estimates of underlying inflation is not an inconsequential issue – what is arguably the most important macroeconomic tool in the economy, monetary policy, has been managed on the basis of data that is well short of the mark.”
Harvey added that when Wednesday’s CPI outcome is considered alongside the weakness in the non-resource domestic economy, the RBA has significant room to cut rates to ensure the countryis wellplaced to ride out any further global instability.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now
Top Suburbs :
Get help financing your investment
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.
We value your privacy and treat all your information seriously - you can check out