RBA slashes interest rates
The Reserve Bank of Australia (RBA) has cut the national cash rate by 25 points today (October 2nd).
Governor of the central bank Glenn Stevens said the outlook for world economic growth had weakened in the past month, which prompted the decision.
Board members gathered for their monthly meeting and eventually agreed to reduce interest rates to 3.25 per cent – the lowest point for three years.
Mr Stevens stated that commodity prices had dipped in recent weeks and the Australian dollar had remained stubbornly high.
This was undoubtedly piling the pressure on the country's businesses and a number of organisations have been calling for a rate cut for quite some time.
Indeed, earlier this week, the Construction, Forestry, Mining and Energy Union and Australian Council of Trade Unions urged the RBA to ease some of the pressure on the construction and mining sectors by trimming rates.
Although leaders at the former had told the Australian Associated Press that they were hoping for a 50-point cut, the fact that the RBA has taken action will no doubt offer them some encouragement.
Since November 2011, the RBA has slashed interest rates by 125 points, but this is the first time the board has introduced a reduction since June 2012.
Mr Stevens added that the positive effect of recent adjustments would not be immediately obvious, but he felt that there have already been signs that the cuts have started to benefit the Aussie on the street.
"However, credit growth has softened of late and the exchange rate has remained higher than might have been expected, given the observed decline in export prices and the weaker global outlook," he remarked.
"The board therefore decided that it was appropriate for the stance of monetary policy to be a little more accommodative," Mr Stevens continued.
Although the 3.25 per cent national cash rate will take effect from October 3rd, there is no guarantee that all of the country's banks will pass the savings on to their customers in their entirety.
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