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RBA SLASHES RATES TO NEW RECORD LOW

At today’s meeting on monetary policy, the RBA Board has cut the official cash rate to 2 per cent, a new historic low for the Australian market.


RBA Governor Glenn Stevens attributes the following economic factors to today’s decision:

Global Growth: “Is expanding at a moderate pace, but commodity prices have declined over the past year, in some cases sharply.”

Australian Growth: “Looking ahead, the key drag on private demand is likely to be weakness in business capital expenditure in both the mining and non-mining sectors over the coming year. Public spending is also scheduled to be subdued. The economy is therefore likely to be operating with a degree of spare capacity for some time yet."

Unemployment and Demand: “Available information has shown improved trends in household demand over the past six months and stronger growth in employment.”


Inflation: “Inflation is forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.”

The decision: “The Board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand.”

You can read the full statement here.

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