Interest Rates - How Low Will They Go???

It seems as though the current share market crisis is having current property owners laughing all the way to the bank as interest rates continue to plummet.  Almost 2% has been taken off the cash rate in the last 2 months, which I know personally has put much more money in my pocket every month as the rents I charge have stayed the same.  There is now talk of a possible further .75 to 1% drop in December - see http://www.theage.com.au/national/reserve-set-to-cut-rates-again-20081118-6adk.html

This has got to be great news for investors.  The question is, how low will interest rates go?  Is the share market crisis a blessing in disguise for property owners and investors who only 7-8 months ago were struggling with ever increasing rate rises?

You need to see the big picture,  Interest rates should be going up to curve in spending and borrowing,  Not being lowered to try and inflate the bubble some more,  The lowered interest rates will have some very negative impacts for Australians

Massive inflation next year,  Devalue of the dollar which will bring higher prices for many things such as food.

Nothing the government can do will invigorate the property boom.

Hi Darth,

Interest rates have dropped to encourage spending because no-one is.  How can spending be curved when it's already at it's lowest point for a long time?

As far as our dollar goes, our economy thrived for over a decade when our dollar was downaround the 50-70 US cents mark.  It was only when our dollar jumped to almost $1 US that our ecomony slowed and our interest rates soared.  I see the lower dollar as a benefit rather than a hindrance to our economy.  In regards to food - imports may increase in cost, but local produce will be more attractive as they become the cheaper option against imports...

Wow!  We've just seen another 1% come off interest rates today.  Who else is excited by this?!

Keep pumping up the buble....us ausies dont like to be left behind, we love to be just like our big brother...

I think the world is more worried about preventing deflation at this point, hence the spending spree and rate cuts. With massive loans for most households I'm not suprised either. So I suspect the govt and rba will do its best to prevent deflation at any cost.

I hope they drop down to zero % then can starty paying off the principal debt :)

What about all those people who have moved their money into cash because of the volatility of the share market? I read of the possibility of rates at between 2% and 3% by around Easter next year. If rates drop to that level then it would hardly be worth it.

The government wants you to spend that's the whole point. If people don't the system starts to implode . Low interest rates so you borrow to spend. And the fact that low interest rates do not really entice you to save.
Its a triple whammy otherwise that is self feeding
1. more unemployed = a bigger drain on unemployment benefits
2. more unemployed = less people paying taxes
3. more unemployed = less consumer goods bought which then moves more people into group number 1 as business collapse