RBA delivers consecutive rate cut
(7 December 2011 – Australia) The Reserve Bank of Australia (RBA) cut its cash rate by 25 basis points to 4.25 percent on Tuesday, an early Christmas gift for borrowers and retailers.
The Bank of Queensland (BoQ) is the first bank to move its rate, passing on the full cut to 7.36 percent for its standard variable mortgage rate.
If passed along in full by the banks, today’s cut will save the average mortgage holder - with a A$300,000, 25-year mortgage - about A$47 a month. Retailers had been calling for a rate reduction to help bolster tepid sales heading in the final few weeks of 2011.
The RBA noted that while the previous rate cut had reduced credit costs, conditions remained difficult for many.
'The reduction in the cash rate as a result of the Board's previous decision flowed through to lending rates, which are now around their average level of the past 15 years,' said RBA Governor Glenn Stevens in a statement.
'Overall, the Board concluded, on the basis of all the available information, that the inflation outlook afforded scope for a modest reduction in the cash rate,' Stevens said.
Economists had been split almost evenly between those forecasting a rate cut or a rate pause. Financial markets, though, had tipped the central bank would again cut rates as the global economic outlook dims.
The dollar sank after the rate cut as the Australian currency lost some of its appeal. It sank more than half a US cent to fall below US$1.02.
The Reserve Bank board is not due to meet again to set interest rates until 7 February next year.
If passed along in full by the banks, today’s cut will save the average mortgage holder - with a A$300,000, 25-year mortgage - about A$47 a month. Retailers had been calling for a rate reduction to help bolster tepid sales heading in the final few weeks of 2011.
The RBA noted that while the previous rate cut had reduced credit costs, conditions remained difficult for many.
'The reduction in the cash rate as a result of the Board's previous decision flowed through to lending rates, which are now around their average level of the past 15 years,' said RBA Governor Glenn Stevens in a statement.
'Overall, the Board concluded, on the basis of all the available information, that the inflation outlook afforded scope for a modest reduction in the cash rate,' Stevens said.
Economists had been split almost evenly between those forecasting a rate cut or a rate pause. Financial markets, though, had tipped the central bank would again cut rates as the global economic outlook dims.
The dollar sank after the rate cut as the Australian currency lost some of its appeal. It sank more than half a US cent to fall below US$1.02.
The Reserve Bank board is not due to meet again to set interest rates until 7 February next year.
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