RBA cuts interest rates by 1 percent (1 Viewer)

[КГБ]

The Reserve Bank of Australia has slashed cash rates by 1 percent, in an attempt to shore up the ailing econonmy against the rising tide of gloomy economic data.
Earlier today, Prime Minister Kevin Rudd urged Australia's banks to pass on the rate cut to cash-strapped homeowners, as he unveiled a $42 billion stimulus package to boost the economy. The plan includes cash handouts to low to mid-income earners.
The RBA's aggressive move has pushed the cash rate down to 3.25 percent - the lowest level since February 1964.

discuss.

 

[Trefoil]

Yeah, I didn't think they'd cut any higher.. The next 6 months will be interestin; the earlier interest rate cuts will have started to act by now.

P.S. I fucking hate the phrase "shore up". Anybody who uses it instantly loses credibility.

 

[imsopostmodern]

it was expected.

but give it much longer and we wont be able to cut them by much more.

lets hope it gets passed on.

that feels so ineloquent.

 

[Trefoil]

but give it much longer and we wont be able to cut them by much more.

Um. We've fallen about 4% in the past 6 months or so and we're still only at 3.25% which I believe is the highest in the developed Western world (actually, New Zealand might be 3.5%).

If they need to keep cutting (which they may well), there's room for it.

 

[Rafy]

At its meeting today, the Board decided to reduce the cash rate by a further 100 basis points, to 3.25 per cent, effective 4 February 2009.

There was a significant deterioration in world economic conditions late in 2008. The effects on household and business confidence of the financial turmoil following Lehman’s collapse, and continuing strains on major financial institutions, saw a significant downturn in demand around the world. As a result, the major advanced economies contracted sharply in the December quarter, as did a number of emerging market economies. The Chinese economy, though still growing, has slowed markedly. Global inflation, having reached high rates during the middle of 2008, is now declining.

Measures to stabilise financial systems have contributed to an improvement in the functioning of credit markets over the past couple of months. This, in conjunction with expansionary macroeconomic policy measures being taken around the world, should assist in promoting global recovery over time. But the near-term outlook for the global economy is the weakest for many years.

Economic conditions in Australia have also been affected, though less than in other advanced economies. Australia’s financial system remains in a strong condition and large interest rate reductions over recent months have been passed through in substantial measure to end borrowers. Nonetheless, the combination of last year’s financial turmoil, a severe global downturn and substantial falls in commodity prices has had a significant dampening effect on confidence, and therefore on prospects for growth in demand. Inflation has begun to moderate and, given recent developments, it is likely to continue to decline.

In these circumstances, the Board judged that a further sizable reduction in the cash rate was appropriate, to give further support to demand. In making its decision, the Board took into account the package of measures announced by the Government earlier today. The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad.

RBA: Media Release-Statement by Glenn Stevens, Monetary Policy

 

[HalcyonSky]

Just make it 0.

 

[imsopostmodern]

i do realise this. the fact that the cash rate was so high to begin with certainly has helped Aus (in relative terms) because we are able to reduce it in an attempt to stimulate the economy. BUT the economic situation is expected to worsen over the next 6-12 months and if the RBA continues to cut rates as much as they have in the last 6 months, then what other approaches to stimulating the economy will we have? there's room for it, but what happens when they use up that as well? which could feasibly happen if they continue at the same rate as the last 6 months or so.

 

[Trefoil]

i do realise this. the fact that the cash rate was so high to begin with certainly has helped Aus (in relative terms) because we are able to reduce it in an attempt to stimulate the economy. BUT the economic situation is expected to worsen over the next 6-12 months and if the RBA continues to cut rates as much as they have in the last 6 months, then what other approaches to stimulating the economy will we have? there's room for it, but what happens when they use up that as well? which could feasibly happen if they continue at the same rate as the last 6 months or so.

Actually, Australia's pegged for zero growth in 2009 and 1% to 2% growth in 2010. Compare with America being pegged for negative growth in 2009 and zero growth in 2010. We've got the best economic forecast of pretty much any Western country.

Once we're down to about a 2% cash rate (probably by July or October), they'll stop cutting and stop stimulating and let the measures run their course.

 

[Raven3333]

/sigh

I'm going to be getting 3.25% intrest on my hard earned savings.

 

[Riet]

Just make it 0.

Worked for Japan!

 

[CIV1501]

yay!!1!!!

 

[H@wkeye!]

It's working for the USA, too.

Woo inaccurate reflections of risk in markets.

Agreed, those sub-prime mortages!

But what can ya say, they have to show they're at least trying!

 

[Lex152]

/sigh

I'm going to be getting 3.25% intrest on my hard earned savings.

That's the point, they want to make you spend that