Business Spectator - More rate cuts likely after flat lending

More rate cuts likely after flat lending
AAP

Lending to the private sector was flat in February as personal and business loan volumes fell, supporting the case for further interest rate cuts central bank figures show.Total credit provided by financial intermediaries was unchanged, following a 0.6 per cent rise in January, the Reserve Bank of Australia said on Tuesday.The result took the annual growth rate down to 5.4 per cent, its slowest pace in 15 years, or since 1994.

RBC Capital Markets senior economist Su-lin Ong said the data support the case for a further interest rate cut after the RBA board meeting on monetary policy next Tuesday."At the margin, the data continue to support the case for lower cash rates in Australia, but the timing remains more debatable with the RBA continuing to hint at a reluctance to cut much further," she said in a statement."The disappointing domestic data since the March meeting and still challenging global backdrop suggest that the case for a cut next week remains compelling."We expect a 25 basis point move." The key cash interest rate was left unchanged in March at 3.25 per cent.

Meanwhile, lending for housing credit rose 0.6 per cent in February, and by 7.1 per cent over the year, seasonally adjusted, while other personal credit was down 0.8 per cent in the month, and six per cent in the year, the RBA data show.

Business Spectator - More rate cuts likely after flat lending

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