The cut in official interest rates brought them to the lowest level since the early 1960s. It was a move expected by many but perhaps not welcomed by all.

Cutting rates recognises the fragile state of our economy that could further unnerve consumer confidence. It is hoped that the rate cut will give that much-needed stimulus to business investment and consumer spending.

In his announcement, Reserve Bank governor Glenn Stevens acknowledged the Board wanted to “reinforce recent encouraging trends in household demand”. That’s a worrying thought considering the low wages growth.

There is only so much the RBA can do to repair economic growth back to trend. It really lies now with the state and federal budgets.

Low rates tend to attract higher activity levels putting upward pressure on price. The booming Sydney market and issues of affordability must be addressed. The Domain Group reported Sydney’s median house price is now $914,056 and could be set to…