Rate cut prudent due to economic conditions

Century 21, the largest real estate sales organisation in the Asia Pacific region, believes the Reserve Bank's decision to cut the official cash rate to the historically low level of 2.25 per cent may be wise in light of current Australian economic conditions.

"The Reserve Bank likely cut the cash rate in light of softening economic conditions, such as slower than expected growth in the euro area and Japanese economies," said Century 21 Australasia chairman and owner, Charles Tarbey.

"Reducing the rate by 25 basis points may further incentivise buyers and sellers of real estate to continue transacting throughout 2015.

"This development, which may have come as a surprise to some, has set a strong foundation for the real estate market heading into the new year," said Charles Tarbey.

In their announcement, the Reserve Bank acknowledged that price falls in commodities, particularly oil, appeared to indicate not only lower demand, but significantly higher supply levels.

The Reserve Bank also noted below-trend growth domestically, and the lowest increase in the CPI recorded in several years.

"It will be interesting to observe developments this year regarding the cash rate, with many commentators speculating about the possibility of further rate cuts in the future," concluded Charles Tarbey.


Disclaimer: The opinions posted within this blog are those of the writer and do not necessarily reflect the views of CENTURY 21 Australia, others employed by CENTURY 21 Australia or the organisations with which the network is affiliated. The author takes full responsibility for his opinions and does not hold CENTURY 21 or any third party responsible for anything in the posted content. The author freely admits that his views may not be the same as those of his colleagues, or third parties associated with the CENTURY 21 Australia network.