Saturday, January 23, 2021

Reserve Bank of Australia cuts interest rates to historic lows of 1%

Reading Time: 2 minutesEarlier today, the Reserve Bank of Australia announced 0.25% cut to cash rates to a record low of 1%.
This cut, the second one in successive months, is the first time since 2012 that the RBA has announced back to back interest rate cuts, which is meant to boost the economy and an attempt to slow down unemployment and drive up wages.
The RBA Governor Dr Lowe, in his announcement, said there were some tentative signs that house prices in Sydney and Melbourne had stabilized, pointing out that mortgage rates were now at record lows. But he gave no signs that this was the last cut by the RBA in this current cycle. Economists are expecting two more cuts in the next 10 months.
Bank1.Indian Link
What will be interesting to observe is which of the major banks pass on this cut in full to their borrowers. The banks, which are working on shrinking margins, will be tempted to only marginally pass these tax cuts. In the rate cut announced last month, only two of the major banks – NAB and Commonwealth Bank – passed the full 0.25% to their customers. If the rate cut is passed on in full, this will be a saving of about $1,400 pa on a $800,000 mortgage.
Bank.Indian Link
For investors, holding on to cash in their portfolio, this will further reduce their interest earnings, while there will be a pull towards equities with their strong dividends.
However, the structural challenges in the economy need be kept in context, before any investment decisions are taken.

- Advertisement -
Pawan Luthra
Pawan Luthra
Pawan is the publisher of Indian Link and is one of Indian Link's founders. He writes the Editorial section.

Related Articles


Please enter your comment!
Please enter your name here


Ep8: Indian links in Indigenous Australian poet Ali Cobby Eckermann’s life

To celebrate NAIDOC week 2020 (between 8-15 November) I spoke to Yakunytjatjara poet Ali Cobby Eckermann about her time in India where she taught...

Ep 7: In the case of Sushant Singh Rajput

  The torrid and high-octane Sushant Singh Rajput case has been fodder for Indian people and press for the last few months. The actor’s tragic...

Ep 6: The Indian LGBTQ+ community in 2020

  It’s been two years since the world’s largest democracy repealed the draconian Section 377 which used to allow discrimination against homosexual people. Only this...

Latest News

lilly singh

WATCH: Lilly Singh as Sima Taparia in “Indian Matchbreaking”

  Whether we liked it or not, most of us gave into the Sima Taparia craze during lockdown. Within days, we'd all binged on Netflix's...
karl rock

From New Zealand to New Delhi: Meet YouTube’s Karl Rock

  When Karl Rock picks up the phone (with a cheerful ‘Namaste!’ no less), his New Zealand accent is apparent. That is, until he bursts...
Buddhist Kung Fu nuns kicking hard at centuries-old taboos

India’s Buddhist Kung Fu nuns

  They are the Buddhist Kung Fu nuns of Drukpa lineage, known globally for trekking across the Himalayas to pick up trash, paddling through mountain...
jhansi strawberries

Strawberries to write a new chapter of development in Jhansi

  Jhansi which is well-known as the land of valour is all set to write a new chapter and strawberry cultivation would play a pivotal...

WATCH: Aussies try to guess Indian slang

  Many new migrants have had to quickly learn the local lingo upon arriving in Australia, picking up the ie's and the o's as part...