RBA: Australia getting a lot of traction from cuts

Thursday 19 February 2009

Article by Mozo

The overall health of the Australian economy has allowed the Reserve Bank of Australia (RBA) to make leaps and bounds on the road to recovery with its strategic cuts to the base rate.

In a speech to financial chiefs yesterday (February 18th), assistant Reserve Bank governor Malcolm Edey insisted that the group has gained “much more traction” from the cuts of recent months, which have led to a flurry of new low-interest home loans and onrush of first-home buyers to the market.

“In the period since the RBA started cutting the cash rate in September, substantial rate cuts have been passed through to end borrowers, particularly for housing loans,” he explained.

He said that in comparison to countries such as the UK and US where the national economy is looking a lot sketchier, rate cutting efforts have resulted in far fewer new low-interest home loans.

Since September, the Reserve Bank has lopped off a whopping 400 basis points off the base rate, with the majority of banks duly tinkering with their home loan rate after each cut was made.

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