Britain may be a long way away but the shock decision of British voters to leave the EU is having worldwide repercussions, including here in Australia. Financial markets hate uncertainty – and Brexit is causing a great deal of uncertainty. This uncertainty, together with consistently low rates of inflation, have led many market-watchers to forecast a further reduction in the RBA’s cash rate in August. And, of course, these predictions were made when most observers expected a stable majority government to be installed after the federal election. With a hung parliament looming, the RBA seems most likely to wait until its August meeting to make any interest rate changes.
So, it may be that Australian’s with a home loan can expect at least one further interest rate cut in 2016.