Interest rate uncertainty affects household budgets

The Reserve Bank of Australia is due to make its next decision regarding the official cash rate on Melbourne Cup Tuesday (November 1), with industry opinion appearing to be divided on whether the board will decide to keep it steady or make a cut.

Core inflation figures may represent the key, as even relatively small fluctuations have the potential to influence how the RBA views the nation's economic outlook.

Fairfax Media analyst Michael Pascoe says the bank is likely to focus on future predictions not past conditions.

"If the RBA is concerned about how inflation is shaping up in the months ahead, it's not going to be terribly interested in what it was doing a year ago," Pascoe asserts today (October 24).

Such uncertainty over the cash rate raises the issue for homeowners of remaining financially prepared for upcoming announcements to either help or hinder their savings.

While it would unwise to budget for a rate cut that may not arrive, there are other strategies households can employ to make the most of limited income and economically difficult times.

One area of expenditure to consider is your bills - could you benefit from lower electricity prices for example?

A switching service may be able to help you find a better deal that saves you some crucial money each month.

Posted by Charlie Moore