Its great news that the reserve bank of Australia has cut interest rates. Its interesting how the banks don’t pass on the full rate cut to the consumer though. The explanation that the banks give is the cost of utilising client deposits is higher than the interest rate. I suppose that could be logically correct in some circumstances if they are using the deposits of customers in Australia to fund loans, but not if they are using funds from overseas as the cost of that funding source is much lower. Consumer confidence in Australia is at its lowest and the reserve bank cutting interest rates by half a base point further demonstrates to the consumer that there is no confidence in the economy. The reserve bank needs to cut interest rates on at least two further occasions in total between half a base point to one, then I believe they could remain static for the next couple of years.
The Australian Government must realise that if we take the mining industry out of the equation we are in a recession, we are not the lucky country as they say we are just lucky to have resourses to depend on
Once the confidence is restored to the public with job security then the housing market will take off again in order to meet demand as we don’t currently have enough homes to accommodate our growing population.