Interest Rates down by 0.25%

Well it has finally happened and the Reserve has started dropping interest rates. The banks have also come out and have said (rather guardedly) that they will also drop their rates. The problem for the banks is that international credit has a greater affect on their rates than what the Reserve is doing. I think that the fear of being bashed by the Treasurer is the main reason for the banks announcing that they are dropping rates.

Is it good news? Well for those that are being squeezed by interest payments will initial welcome it. However, you need to remember that Interest Rates never drop in a healthy economy and they never rise in a bad economy.