Latest interest rate cut breaks records
Latest interest rate cut breaks records
Posted on Tuesday, May 07 2013 at 2:56 PM
Australia’s official cash rate is now the lowest it has been since official records began in 1959, sitting at just 2.75 per cent.
The
Reserve Bank of Australia (RBA) today decided to shave another 25 basis points off
interest rates, after sitting tight for the first few months of the year.
The move
was widely tipped by economists and analysts, after the release of more patchy
financial data in recent weeks.
House
price growth, retail trade figures and new home construction numbers for the
month of March were lower than expected.
This
latest reduction means the cash rate is 175 basis points lower since the RBA
began its current course of cuts in November 2011.
A
statement from RBA Governor Glenn Stevens acknowledges that the cuts are
starting to flow through to the wider economy.
“Over recent meetings, the Board has
noted that interest rates have already been reduced substantially, with
borrowing rates approaching previous lows, and that the effects of this on the
economy are continuing to emerge,” Stevens says.
There could also be scope to lower rates
further in the future and most analysts still tip reductions of between another
25 to 50 basis points.
“The Board has previously noted that the
inflation outlook would afford scope to ease further, should that be necessary
to support demand,” Stevens says.
“At today’s meeting the Board decided to
use some of that scope. It judged that a further decline in the cash rate was
appropriate to encourage sustainable growth in the economy, consistent with
achieving the inflation target.”
How much
of today’s cut the big banks will pass on to mortgage holders remains to be
seen.
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