Along with two thirds of the market, we believe the Reserve Bank of Australia will cut the official cash rate by 25 basis points when they meet after the Easter long weekend, on Tuesday April 7th. The official cash rate will drop to an all time low of 2.00%.

Retirees who rely on interest as a source of income, will not be happy. The interest they earn on their savings has fallen by more than 72% since 2008, when the official cash rate was 7.25%. At a rate of 2.00% it is unlikely that term deposits will keep pace with inflation.

Those of us who have variable rate debts, such as home loans, will benefit from the rate cut. A reduction in our monthly interest means we can either make smaller payments, or pay our debt off faster (or a combination of both). You can see what impact the rate cut will have on your mortgage, with our repayment calculator

A recent history of Australian Interest Rates

The chart below shows how the RBA has moved our cash rate since the February 2000