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The cash rate is expected to fall to 3.25 per cent tomorrow and could fall below 2 per cent by the end of 2009, according to industry forecasts.
Westpac has tipped a 1 per cent cut tomorrow – a level supported by the futures markets. Loan Market Group executive director John Kolenda has also predicted that the RBA was likely to lower the cash rate by 1 per cent tomorrow with further cuts to follow.
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“We expect the cash rate will now go under 2 per cent this year, but the question that remains is how the RBA manages the timing of these rate cuts,” he said.
Mr Kolenda said more rate cuts were needed to bring life to the ailing property market.
“Having a healthy property market is always indicative of a strong economy and taking the cash rate down from the current level of 4.25 per cent will be a key step in renewing investor confidence and bringing buyers back to the market.
Mr Kolenda has also called on the Federal Government to extend the boost to the First Home Buyers Grant for another six months beyond its June 30 expiry date.
“There is concern that first home buyers will simply run out of time to find homes in time and get loans,” he said.
