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The new normal - 1 per cent interest rates

Posted by Kirsten Lowis on 12 August 2019
The new normal - 1 per cent interest rates

Back in May 2019, New Zealand's cash rate dropped by a quarter point, then the Aussie dollar followed suit in June, with the US Federal Reserve following the trend in July.  This week the Australian dollar hit a ten-year low against the US dollar following an unexpected 0.5% rate cut by New Zealand's central bank.

The NZ rates were expected to move 25 basis points, but surprisingly it was dropped to just 1.0 per cent.  This super-sized rate cut has had a knock-on effect for our Australian dollar, which has been cut for two straight months in a row, hitting US 66.77 cents this week.

The Australian Reserve bank has held the cash rate at a record 1.0 percent which has been considered by governor Dr Philip Low as "increased" uncertainty for the global economy.  Dr Lowe said escalating trade and technology disputes between the US and China were generating volatility that could derail much needed investment to kickstart Australia's economic growth.

The result is very cheap money to encourage spending to stimulate economic growth. Dr Lowe acknowledged another cut before the end of 2019 might be required, while the country should expect a new normal of low interest rates.

Kirsten LowisAuthor: Kirsten Lowis
About: As the Founding Director of Zoom in Business - a subscription-based network and magazine, NQ Business Sales - a business sales firm based in North Queensland, and Bizrich - a business valuation firm, Kirsten has learnt from the trenches and brings a wealth of personal and professional experience and knowledge to our members. With over 13 years as a franchisee, retailer and start-up business owner, Kirsten has worked closely with fellow coaches, hundreds of clients and the best facilitators in Australia who have run their own business or have experience in running a business and teams. Kirsten’s extensive knowledge and experience as a Registered Business Valuer and Licenced Business Broker helps our readers and members improve awareness of the state of the market, understanding and confidence in buying, growing, valuing and selling their business, while connecting them with local and international news stories and experts to create a capable and dynamic business network.
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