Cash rate dips another 1%
(3 December 2008 – Australia) The RBA has announced it has chosen to reduce the official cash rate in Australia by another percentage point, to 4.25 percent.
The Reserve Bank Board, at its monthly meeting for December, decided to drop the target cash rate by 100 basis points, the fourth fall in as many months.
The cash rate has dropped from peak of 7.25 percent in March this year, including two full percentage point cuts in September and now in December.
The new cash rate of 4.25 percent is now at the cyclical low seen in December 2001, however it is this time expected to continue falling.
The Board said that a further significant reduction in the cash rate was warranted now, to take monetary policy to an expansionary setting.
Given trends in money market yields, most lending rates should fall significantly and will also reach below-average levels, the RBA said.
The RBA Governor, Glenn Stevens, said that recent actions by governments and central banks to stabilise their respective financial systems have begun to take effect, however financial market sentiment remains fragile.
Evidence accumulates of weak economic conditions in the major countries and a significant slowing in many emerging countries, he added.
The much analysed inflation rate is of less worry to the RBA in the current climate than it has been previously. Stevens said that falling commodity prices combined with the likelihood of below-trend growth in the global economy, suggests that global inflation will moderate significantly in 2009.
The cash rate has dropped from peak of 7.25 percent in March this year, including two full percentage point cuts in September and now in December.
The new cash rate of 4.25 percent is now at the cyclical low seen in December 2001, however it is this time expected to continue falling.
The Board said that a further significant reduction in the cash rate was warranted now, to take monetary policy to an expansionary setting.
Given trends in money market yields, most lending rates should fall significantly and will also reach below-average levels, the RBA said.
The RBA Governor, Glenn Stevens, said that recent actions by governments and central banks to stabilise their respective financial systems have begun to take effect, however financial market sentiment remains fragile.
Evidence accumulates of weak economic conditions in the major countries and a significant slowing in many emerging countries, he added.
The much analysed inflation rate is of less worry to the RBA in the current climate than it has been previously. Stevens said that falling commodity prices combined with the likelihood of below-trend growth in the global economy, suggests that global inflation will moderate significantly in 2009.
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