How interest rates could be reduced to a NEW record tomorrow – as the experts are worried about a recession
- Financial markets see a interest rate cut on Tuesday as a chance of 76 percent
- Reserve Bank is tipped to lower the cash rate to a new record of 0.75 percent
- JPMorgan, chief economist Sally Auld, said an interest rate cut on October 1 was very likely
- Federal Reserve Bank of St. Louis in the US said that Australia is dependent on high immigration
It is expected that interest rates will be lowered to a new low tomorrow, as the experts worry that Australia will be in recession for the first time since 1991.
Financial markets see an interest rate cut in October on Tuesday as a chance of 76 percent.
If the Reserve Bank of Australia did the expected, the cash price would fall by a quarter of a percentage point to just 0.75 percent.
As a result, the standard variable mortgage interest rate would fall below three percent for the first time.
It is expected that interest rates will be lowered to a new low tomorrow, because the experts are worried that Australia will end up in a recession. Financial markets see an interest rate cut in October on Tuesday as a chance of 76 percent (pictured is a store in Brisbane for rent)
JPMorgan, chief economist Sally Auld, said a new interest rate cut in 2019 was inevitable, as monetary policy makers worried about Australia's slow economic growth rate and weak consumer spending.
& # 39; It's really a matter of when not, & # 39; she said to Daily Mail Australia on Monday.
& # 39; They are going to cut back before the end of the year and yes, we are looking for an interest rate cut tomorrow. & # 39;
The Australian economy grew by just 1.4 percent in the year until the end of June, the slowest pace since the global financial crisis ten years ago.
Gross domestic product is also growing more slowly than the Australian population, which is increasing by 1.6 percent.
Without a high level of immigration, Mrs. Auld said that for the first time since mid-1991, Australia was about to fall into recession.
& # 39; If you adjust total GDP growth to population growth, you will get a negative number, & # 39; she said.
& # 39; If you adapt to population growth, I think we are pretty close to a technical recession. & # 39;
The Federal Reserve Bank of St. Louis, one of the 12 that is part of the US central bank, suggested last week that Australia was dependent on high immigration to prevent a technical recession (the photo shows Sydney commuters during the rush hour)
Australia has been avoiding a technical recession for 28 years, defined as two or more consecutive quarters of economic contraction.
The Federal Reserve Bank of St. Louis, one of the twelve that make up the US central bank, suggested last week that Australia was dependent on high immigration to prevent a technical recession.
Senior economist Paulina Restrepo-Echavarria and research assistant Brian Reinbold pointed out that since last year, Australia had experienced a recession per capital, with output per person falling.
"This discrepancy between GDP per capita growth and GDP growth implies that population growth has been a key factor in Australia's economic expansion," they said in their article entitled: Has Australia really had an extension of 28 years?.
& # 39; A rising population increases the size of the economy and therefore total production is increasing, which is reflected in the level of GDP.
& # 39; Australia has had a higher population growth rate for nearly 40 years than other industrialized economies. & # 39;
They pointed out that since the early 1980s, Australia had experienced eight recessions per capita compared to six in France.
Australia's pace of growth is also double the average of the rich world at 0.8 percent.
Ms. Auld said that the strong Chinese demand for Australian iron ore and government spending on major transportation infrastructure projects meant that the economy did not end up in a technical recession for the time being.
& # 39; If net exports did not go well and government spending did not go well, the economy looks very, very soft, & # 39; she said.
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