RBA Reduces Interest Rates by 0.25%

At its meeting today the Reserve Bank decided to reduce the official cash rate by 0.25%.

In recent weeks it has been widely expected that the RBA would reduce interest rates after weaker economic data has been released.

Some of the RBA comments in their statement were:

Global growth is forecast to be a little below average for a time. Risks to the outlook are still seen to be on the downside, largely as a result of the situation in Europe, though the uncertainty over the course of US fiscal policy is also weighing on sentiment at present. Recent data suggest that the US economy is recording moderate growth and that growth in China has stabilised. Around Asia generally, growth has been dampened by the more moderate Chinese expansion and the weakness in Europe.  Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past few months. The terms of trade have declined by about 15 per cent since the peak, to a level that is still historically high.

Over the past year, monetary policy has become more accommodative. There are signs of easier conditions starting to have some of the expected effects, though the exchange rate remains higher than might have been expected, given the observed decline in export prices and the weaker global outlook. While the full effects of earlier measures are yet to be observed, the Board judged at today's meeting that a further easing in the stance of monetary policy was appropriate now. This will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time.

This gives variable rate mortgage holders a small bonus leading into Christmas.  It may be wishful thinking but here's hoping the banks pass this latest cut on in full!

As always, please contact the office on 07 3376 1005 or email if you have any queries or would like a review of your current finances.