RBA Cuts Interest Rates; Australia Hopes for a Merrier Christmas
From 4.5 percent, the Reserve Bank of Australia (RBA) cuts cash rates down to 4.25 percent during its December board meeting. This is the second time RBA cut rates.
A divided house of economists at the December meeting was thinking what the central bank will do. Out of the 14 economists that were surveyed by the AAP, 7 of them believed that there was going to be a cut.
“Financial markets have experienced considerable turbulence, and financing conditions have become much more difficult, especially in Europe,” said Glenn Stevens, Governor of RBA. He also added that the financial and banking problems of eurozone are going to weigh on economic activity in the succeeding months.
“This, together with precautionary behaviour by firms and households, means that the likelihood of a further material slowing in global growth has increased. Commodity prices have reflected this, declining further over recent months and taking pressure off CPI inflation rates. This has increased the scope for some easing in monetary policy in a number of countries,” said Stevens.
According to Stevens, global growth has become steady now especially in its major trade partner, China.
Hopefully by Wednesday, the data that will show Australia’s growth will be released. An expansion in the economy between 1 and 1.3 percent quarter on quarter is expected by economists. Meanwhile, a growth of 1.2 percent in three months up to June was seen. In the September quarter, inflation was seen at 0.6 percent.
Su-Lin Ong, a RBC economist, explained that the cuts are due to the concerns over the European debt crisis impact on global growth.
“We think that really, while the Australian economy is in reasonable shape, it’s the threats to global growth and the potential spillover to Asia and Australia that is driving today’s decision,” she added.
With the recent cut, people now may further enjoy taking out cash loans or easy payday loans. Especially that the Christmas season is here, lack of funds will not be a problem.
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Source : NEWS.COM.AU
