RBA seen to keep cutting interest rates to support economy

Sydney

THE Reserve Bank of Australia (RBA) is likely to keep cutting interest rates as the need to support the economy leaves policymakers willing to stoke a housing boom, according to Goldman Sachs Asset Management.

With debt yielding little or nothing after consumer price gains, investors will increasingly look to other asset classes such as property or equities, said Philip Moffitt, head of Asia-Pacific fixed income at the Goldman Sachs unit, which oversees US$1 trillion. Swaps markets show that the RBA is likely to cut interest rates at least once more from an already record low level, and government bond yields out to six years are now below 2 per cent, the lower end of policymakers' inflation goal.