Until the banks decided to raise both home and investor loan rates, after already being forced a few months ago to raise rates to investors, I thought the Reserve Bank (RBA) would and should keep the cash rate on hold at 2%. However, as the Bob Dylan song goes: “People are crazy and times are strange, I’m locked in tight, I’m out of range, I used to care but things have changed”.
Certainly, I think times are strange and that’s why I have changed. I was locked in tight on no rate change needed for some time but this David Murray/APRA pressure on banks has made it all crazy so I want a Cup Day rate cut.
I will look at the economics of my change of heart on rates later but let me throw in that lower rates will bring the dollar down and help stocks go higher, so there is an added reason for me to become a rate-cutter.