The RBA shocks by reducing the cash rate a further 0.25%
In what was a shock to many experts, the Reserve Bank of Australia has reduced the cash rate a further 25 basis points, taking the official rate to 1.75%. Australia’s recent low inflation rates has been highlighted as a key reason for the latest cut.
Governor Glenn Stevens of the RBA had this to say in his official statement: “Inflation has been quite low for some time and recent data were unexpectedly low. While the quarterly data contain some temporary factors, these results, together with ongoing very subdued growth in labour costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast.” “Monetary policy has been accommodative for quite some time. Low interest rates have been supporting demand and the lower exchange rate overall has helped the traded sector. Credit growth to households continues at a moderate pace, while that to businesses has picked up over the past year or so.
These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.” So, what does all this mean for you? It’s clear by the latest cut that interest rates can change at any moment. Now is the time to consider whether your current loan is the right one for you, right now.