Michael Russell
Michael Russell

Financial Adviser


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Latest interest rate cut: a welcomed decision?

The RBA met yesterday and have cut rates by 25 basis points. This takes the official cash rate to a new historical low of 2.25%. 

It is a welcome decision for borrowers and a not so welcome decision for a large number of retirees who have portfolio’s weighted towards more secure cash and cash like investments. 

The Reserve bank operates independently to the Government and essentially the role of the RBA is to exercise it's powers in the best interest of the country to achieve the following:

(a) Stability of the currency of Australia;
(b) The goal of full employment in Australia; and
(c) The economic prosperity and welfare of the people of Australia.

The Australian economy has been growing below trend, and lowering interest rates is intended to encourage business growth. The RBA sees this as a necessary step to combat current headwinds such as the demand and price of resources declining and rising unemployment. 

The interest rate cut along with the decrease in petrol prices should deliver a reasonable amount of stimulus to the economy and it will be interesting to see the effects of this over the next few months. 

Of course, investors concerned about falling returns from their cash investments should contact to their FMD adviser or book in for a Free Financial Health Check.

General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977.