A dramatic fall in interest rates over the past few months will be a game changer for the economy, says Westpac's latest Economic Overview. "The sharp drop in fixed mortgage rates, combined with the cancellation of capital gains tax, will be a major stimulus for house prices," said Westpac chief economist Dominick Stephens. "We expect annual house price inflation to accelerate from 1.3 per cent now to 7 per cent over the coming year or so. That should spur consumer spending and remove the need for a further OCR reduction from the Reserve Bank." In March the Reserve Bank shifted its policy outlook towards reducing the ... (full story)