Economists are warning more interest rate cuts are unlikely this year after the RBA dropped the official cash rate from 4.35% to 4.1%.
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00:00Here at Southern Cross Station, this is where the daily grind begins for so many Melburnians.
00:08And it certainly has been quite the grind over the past couple of years with the real
00:14cost of living pain that everybody is having to endure.
00:18So it's no surprise that so many people I spoke to this morning as they are busily going
00:23into work were just really relieved and happy at the news that the RBA has cut official
00:30interest rates by a quarter of 1%.
00:34But when you look at the fact that on an average $500,000 home loan, that reduces monthly repayments
00:42by about $77.
00:46Many of the people that I spoke to said that that reduction really doesn't begin to even
00:51touch the sides.
00:52This is what they had to say.
00:54Cost of living has gone up and interest rates are high and yeah, we don't have enough extra
01:01surplus.
01:02Since they started increasing, we are above $1,500, right?
01:06So $77 doesn't make much difference.
01:08Whatever you can save is good, you know, everything is expensive these days, so yeah, a little
01:14help is a big help.
01:15It's great, but I wish it had been a bit more, but it's terrific.
01:21I know a lot of people are doing like two jobs to try to maintain their life, so hopefully
01:26they can relieve a bit.
01:28So just a snapshot there of what people are thinking and that is that they definitely
01:32would like to see another interest rate cut hot on its heels of this one that's just been
01:38announced.
01:39However, the Reserve Bank Governor Michelle Bullock really appears to have poured cold
01:43water on that idea despite market expectations that we will see potentially quite a few cuts,
01:50the first of which is in the middle of the year.
01:52She did say that that really depends very much on the data that is going to continue
01:57to come forward and at the moment, as she says in her words, that those predictions
02:03are far too confident.
02:05Now one of the key measures that they will be looking at, which is coming out imminently,
02:10is what's going on with employment and we've got the wage price index that's going to be
02:15coming out today from the Australian Bureau of Statistics.
02:20That is expected to show another 3% increase in wages and so that is potentially a bit
02:26of a concern for the RBA because that all goes into that inflation picture as well.
02:33And also tomorrow, we are going to be seeing the unemployment data come forward.
02:38Now at the moment, we've got a very tight employment market with unemployment still
02:44sitting at a very low 4% so that's definitely going to factor into what the Reserve Bank
02:50is considering when it next meets at the end of March and the beginning of April.
02:56But from what we're hearing from commuters here, they really would like to see just a
03:00little bit more relief to help them through their family's financial burdens right now.