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Interest Rate Commentary

Although the RBA has been engaged in the cutting cycle since 2011, many market commentators are suggesting we have now reached the bottom of the interest rate cycle. The last few rate cuts have had little impact on their intended mechanisms and rather just fuelled property prices further. If the recent uptick in commodity prices is maintained, upward pressure on the exchange rate may increase but we may see the deficit reduced. For this reason, there is now lesser chance of cuts to the cash rate in 2017.

On the 2nd of December 2016, the ASX 30 Day Interbank Cash Rate Futures November 2016 contract was trading at 98.505 indicating a 2% expectation of an interest rate decrease to 1.25% at the next RBA Board meeting (unchanged from last week).