A chart of the official cash rate is among my favourites on the Reserve Bank website. I remember when the cash-rate target was 17% in 1990. Money-market rates had risen more than 7% since early 1988 and the ‘90s would, thankfully, prove to be the high point.
Borrowers were being crushed and savers like me were lapping up high Term Deposit (TD) rates. Fast forward almost 30 years and the official cash rate is 1.25% and the market has priced in another two cuts over 12 months. Some economists tip a 0.5% cash rate.
Chart 1: Official Cash Rate