Is cutting interest rates further a good thing?

MMJ Blogger
Is cutting interest rates further a good thing?

Today's Financial Review housed an opinion - "Five reasons the RBA definitely shouldn't cut rates." and it got me thinking, who wouldn't want to cut rates? What's the downside?  

With most economists predicting the RBA will cut rates more than once over the coming months taking the official rate into uncharted territory, what could possibly be the downside? 

 The opinion came from a private investor, and they talk about five reasons why the RBA shouldn't cut rates:

  1. Its unlikely to stimulate business investment
  2. It would only provide temporary relief for consumers who borrow
  3. A rate cut will stimulate borrowing at a time when Australians are already heavily indebted.
  4. We shouldn't cut rate to prop up an overvalued housing market
  5. The rate cut is only compensating for the lack of economic reform over the past 15 years.

So this begged the question, should the RBA continue to cut interest rates? 

Tell us what you think?


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