Want some good news? The next interest rate change will probably be a cut.

Almost everything else I have to say is bad news.

Interest rates have gone up three times this year, and just a few weeks ago there were predictions that they would go up even further.

But now the growing consensus, including from economists at three of the big four banks, is that the next move in interest rates will be down.

Why the sudden change?

I have to say that predictions about future interest rates are rarely accurate. Economics is not a hard science, and these predictions are less calculation and more guess-timation.

What’s more, they’re not predicting rates are going to fall immediately. There is almost universal agreement that the Reserve Bank will keep rates on hold when it makes its announcement tomorrow.

What this turnaround really shows is that the economy is not doing well. Interest rate cuts are needed because the economy is in trouble and needs propping up.

The shift has not been because inflation is back in the RBA’s target band of 2-3 per cent. The most recent measure of inflation released last month showed headline inflation........

© The New Daily