More dangerous rate cuts to come

The RBA move might be useful for some ... but it threatens confidence.

Summary: Interest rate cuts over the last few years have had a negative impact on the economy. Growth should be booming in consumer spending, housing and non-mining investment, but it is not, as confidence remains weak. This week’s rate cut, as with earlier cuts, could actually harm confidence and there is no certainty it will lift consumer spending.

Key take-out: Stocks in the consumer discretionary space are perhaps most at risk in this scenario. Property is probably the only clear winner from the RBA’s action.

Key beneficiaries: General investors. Category: Economy.

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