Reserve Bank of Australia governor Philip Lowe says expect another interest rate cut at some point

We can expect another interest rate cut soon, the RBA governor says – but not because the economy’s getting worse.

Another interest rate cut is on the cards with Reserve Bank of Australia governor Philip Lowe telling an Adelaide audience on Thursday that it was “reasonable to expect” another cut “at some point”.

The RBA cut the central cash rate by 0.25 percentage points this month, which was the first cut to official rates since mid-2016.

It will meet again on the first Tuesday of July, and many economists expect another rate cut either next month or in August.

Mr Lowe, speaking at a Committee for Economic Development of Australia event, stressed that the RBA was not biased towards lower interest rates because the Australian economy was performing poorly.

“We’re not cutting rates because the economy’s getting worse, we cut rates and we’ll probably cut them again because we want the economy to be better,’’ he said.

“We’re not cutting rates because the economy’s getting worse, we cut rates and we’ll probably cut them again because we want the economy to be better,’’ RBA governor Philip Lowe said. Picture: Hollie Adams/The Australian

Mr Lowe said he was sympathetic to the issue of retirees and savers earning less on their investments when rates were cut, but on a broad level households overall were clearly better off when rates were lower.

Mr Lowe said the economy was in the unusual position of having modest spare capacity in the labour market, but also low wages growth and low inflation.

He suggested this could be due to a lack of confidence among workers and businesses, and the notion that they were all now competing globally for work and customers.

AMP Capital chief economist Shane Oliver is predicting that the RBA will eventually cut official rates to just 0.5 per cent.