Millions of Australians who have stashed money at their local bank branch could soon be earning next to nothing, if the Reserve Bank cuts interest rates as expected.
- The Reserve Bank left the cash rate at 1.5 per cent on Tuesday, but economists predict it will cut the cash rate later this year
- Financial analysts warn this could see customers end up with no return for their money deposited in banks
- If another rate cut is passed, it may not be practical for the banks to pass that on to customers, a former ANZ chief economist said
Despite enormous pressure from financial markets, the Reserve Bank held its nerve on Tuesday and left the cash rate unchanged at the record low level of 1.5 per cent.
But most economists expect it will cut the cash rate this year, probably twice.
Normally when the Reserve Bank cuts the cash rate the banks follow suit by passing that rate cut onto borrowers.
Mr Johnson said that was even more likely now in the wake of the banking royal commission.
"When you think of the politics of where we are right now, I think it would be unrealistic to think that the banks couldn't pass on," he argued.
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<h1 id="skip-to-content-heading">Could the decision to block the TPG-Vodafone merger leave phone users worse off?</h1>
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"The fact that they didn't get all of their entitlements is an indictment on the Federal Government, which has failed at every step to hold this company and the entire on-demand economy to account over ripping off workers."
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publication on the topic by Novy-Marx in 2006, further increasing its legitimacy.
Figure 1: US 1927-2015; Andrew Berkin 2016, Europe 1982-2014; Stanley Black 2015