Brace for post-Brexit shake up
Australia's economy is bracing for a knock-on effect following the UK's departure from the EU, according to loan comparison website, finder.com.au.
Almost every economist surveyed (31 and out 30) said that the Reserve Bank of Australia (RBA) would not change the cash rate in July, but expected a cut in August.
Finder.com.au said that 67 per cent of experts forecasted that rates would drop in August, as the federal election and Brexit contributed to more uncertainty in the Australian economy.
Notwithstanding that, one economist, Stephen Koukoulsas, said that rates would be cut in July.
"Downside risks to the global economy had intensified to the point where a cautionary rate cut would be prudent," he said.
The expected cash rate cut in (in August or November) was also expected to be the last of this cycle, the website said.
Almost 60 per cent of economist predicted that the cash rate would fall no lower than 1.50 per cent before an upturn, while seven economists said it would fall to 1.25 per cent before an upswing.
Finder.com.au money expert, Bessie Hassan, said it was too early to tell how Australia would be impacted by the British exit, as negotiations were likely to take more than two years.
"Longer term, unemployment and consumer sentiment may be adversely affected.
"Volatility in global markets could mean that Australian banks pay more for the capital they borrow from overseas markets. As a result, we may see banks lifting home loan rates independent of the Reserve Bank," Hassan said.
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