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Interest rate cut is actually a recipe for housing nightmare

1 7 0
05.06.2019

The latest interest rate cut puts Australia on a slippery slope. With rates at historic lows, a cut from 1.5 per cent to 1.25 per cent will do nothing to stimulate the economy.

Controlling the economy by manipulation of interest rates is a tool that is past its use-by date.

Replay

Monetary policy is like a strong drug – highly effective in big doses in the early stages, but as the doses become more extreme, the effect wears off.

Rates are now so low that any changes can make little difference to the economy.

However, what the cuts will do is lure homebuyers into what may be a nightmare journey where they will be stretching themselves to achieve the dream of a first home at a time when rates........

© The Age