RBA eyes more rate cutsUpdate The Reserve Bank has highlighted recent sharp drops in global spending and business activity, suggesting more interest rate cuts to come as the bank battles to avert a recession in Australia. The RBA also noted in minutes released from its February board meeting that the market was now expecting interest rates to ''trough'' at 2% later this year, without specifying its own plans. The meeting resulted in the RBA cutting its key cash rate by another 1 percentage point to 3.25%, the lowest since 1964. Top of the worry list for the central bank is how fast conditions are worsening among Australia's trading partners.
17/02/09 03:47 PM
Update The
Reserve Bank has highlighted recent sharp drops in
global spending and business activity, suggesting
more interest rate cuts to come as the bank battles
to avert a recession in Australia.
The RBA also noted in minutes released from its February board meeting that the market was now expecting interest rates to ''trough'' at 2% later this year, without specifying its own plans.
The meeting resulted in the RBA cutting its key cash rate by another 1 percentage point to 3.25%, the lowest since 1964. Top of the worry list for the central bank is how fast conditions are worsening among Australia's trading partners.
The RBA also noted in minutes released from its February board meeting that the market was now expecting interest rates to ''trough'' at 2% later this year, without specifying its own plans.
The meeting resulted in the RBA cutting its key cash rate by another 1 percentage point to 3.25%, the lowest since 1964. Top of the worry list for the central bank is how fast conditions are worsening among Australia's trading partners.
''Minutes
from that meeting show that concerns about the
large and rapid deterioration in the world economy
preoccupied the Board,'' said Kieran Davies, an
economist of ABN AMRO.
The central bank said that in spite of the Australia's resilience to date, "the headwinds from the global economy were very strong and would continue to have a significant negative effect on the domestic economy in the near term".
The RBA has already slashed 4 percentage points off its key cash rate since September, prompting commercial lenders to pass on most of the reduction to mortgage holders and businesses alike. The average savings on a typical $350,000, 25-year mortgage amount to about $824 a month, if the cuts have been fully passed on.
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The central bank said that in spite of the Australia's resilience to date, "the headwinds from the global economy were very strong and would continue to have a significant negative effect on the domestic economy in the near term".
The RBA has already slashed 4 percentage points off its key cash rate since September, prompting commercial lenders to pass on most of the reduction to mortgage holders and businesses alike. The average savings on a typical $350,000, 25-year mortgage amount to about $824 a month, if the cuts have been fully passed on.
Full Story