Tuesday, December 6, 2011

Reserve Bank poised to cut interest rates as buffer against Europe crisis

I reported on Monday that the board of the Reserve Bank was preparing to hold its final meeting against the backdrop of a deepening crisis in Europe.

However, at the time economists were split on whether another interest rate cut was likely to provide a buffer against a potential breakup of the Eurozone next year.

As the situation looms from bad to worse, 13 of 25 economists polled by Bloomberg predicted the Reserve Bank would decide on another rate cut to 4.25 percent.

Meanwhile, the "big four" banks have combined to assist borrowers who could come under mortgage stress, given the outlook for rising unemployment.

Here's my analysis from Monday's edition of AM.

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