The majority of Australian consumers believe that the official cash interest rate will drop below 2% before the end of this year, a new survey has revealed.
A consumer poll by leading financial advisory and investment group Cigna Wealth found that 60% of respondents anticipate the Reserve Bank of Australia will cut the official interest rate again.
The remaining 40% believed that the cash rate would be held steady at 2% for the remainder of the year, leaving no respondent who expected a cash rate hike.
According to the results, 44% of the 907 online respondents expect the cash rate to be lowered to 1.75%, while 16% thought it could drop to as low as 1.5%.
However, with ongoing concern about the global impact of the Greek debt crisis, economic uncertainty in China, and share market volatility, Cigna Wealth managing director Kent Leicester says it is reassuring the RBA still has more room to move than most other central banks around the world.
“The RBA has been reducing the cash rate since November 2011 and has cut the official rate twice this year in response to subdued consumer confidence and fragile economic conditions,” he said.
“Consumers expect the cuts to continue with worrying international economic developments and weak conditions on the domestic front.”
Leicester is now encouraging home loan customers to take advantage of the low interest rate regime and pay down mortgages as much as possible.
“This current period of record low interest rates is a win-win situation for mortgage holders with the capacity to pay back that little bit extra.”
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