Latest News from Newealth

RBA Cash Rate

• Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner

It was literally inconceivable to forecast when we started this business that the RBA Cash Rate would fall from 12.00% in February 1991 to 0.10% in November 2020.

Click for chart.

The RBA reducing the Cash Rate by 0.25% today which is good news for almost every financial asset price because a reduction in cost increases profit.

However, lowering interest costs also has the negative effect of fanning asset price bubbles like for example, residential property in major population centres of Sydney and Melbourne.

If you are a student of Value Investing Principles as taught by Benjamin Graham then you would know that current residential property prices make no sense relative to the rental income that they produce.

The key question right now that is being asked by the market is how low will interest rates fall in this rate cutting cycle?

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At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.