Finally! RBA slashes officialinterest rate to 1.75%

Speculation about a potential rate drop in the lead up to this month’s RBA announcement has proved correct, as Reserve Bank interest rates were slashed to 1.75%.

Experts conjectured that turbulent market conditions at the start of the year, including uncertainty in the Australian property market - particularly in urban hubs Sydney and Melbourne - and misgivings about China’s economy, may have been cause enough for a rate cut. These factors, along with a drop in the Aussie dollar last week and economic deflation for the first time in seven years, prompted the RBA to agree.

In a statement, Governor Glenn Stevens said that, “Commodity prices have firmed noticeably from recent lows, but this follows very substantial declines over the past couple of years. Australia's terms of trade remain much lower than they had been in recent years."

Prior to the announcement, many experts had been in agreement that RBA interest rates would stay the same, with many citing the Federal Budget Announcement - scheduled for 7.30 pm - as one deciding factor, saying the Reserve Bank was unlikely to upstage the budget announcement.

Stevens said that the RBA board felt that "prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting."

Has your bank been naughty or nice?

While RBA interest rates being cut to a new low of 1.75% is great news for borrowers, experts have warned that some banks may play grinch and fail to pass on these savings to customers.

Our rate chasers will be on the case updating our naughty or nice table below to show you if your bank has been playing fair: