Why interest rates will not fall soon – or by much when they do

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With central banks in the United States, Canada, New Zealand and England cutting interest rates, there is a sense that our Reserve Bank is set to do likewise.

That’s a misreading of the facts. It’s unlikely that the RBA will cut rates any time soon. And when they do, we shouldn’t expect rates to fall very much. In fact, it’s likely that the cash rate will settle at between 3.5 per cent and 4 per cent in the medium term.

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