Cash rate cut won’t be the ‘silver bullet’ that saves the economy

Cash rate cut won’t be the ‘silver bullet’ that saves the economy

Australian economist Stephen Koukoulas says the Reserve Bank of Australia’s emergency cash rate cut would help businesses and homeowners already “well off economically in this crisis”.

“It was not a surprise – the critical thing is it won’t be the silver bullet that fixes the economy there are many moving parts to this,” he said.

“If you are one of the lucky ones, you’ve got a full-time job, you are still getting your pay, you may have a mortgage you are already benefiting from very low interest rates.

“That will help people who are already reasonably well off economically in this crisis.”

Mr Koukoulas said the historic cash rate cut, down to 0.25 per cent, would help industries cope with coronavirus challenges.

“It also helps the business sector,” he said.

“We know the business sector has loans close to a trillion dollars if they are saving a little more on their interest payments – it won’t be the thing that fixes the economy – but it helps with the margin.”

Image: News Corp Australia

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