Rates cut to 5.25%
November 4, 2008 – 2:38PM
UPDATE The Reserve Bank of Australia has cut its key interest rate more than expected as it attempts to prevent Australia’s economy stalling.
The central bank lopped three-quarters of a percentage point – or 75 basis points – off its cash rate, reducing it to 5.25%, the lowest level since December 2003.
”The fact the RBA continues to delivery outsized interest rate cuts suggests the RBA is extremely worried about the growing risks of recession,” said Macquarie Bank interest rate strategist Rory Robertson.
“The measure of how worried the RBA is about the economy is the fact that it’s unwound two-thirds of six years of monetary tightening in three months.”
The cuts came after today’s monthly board meeting by the RBA, and marks three months in a row of reductions. Fifteen of 16 economists predicted the RBA would opt for a 50 basis-points cut, and one tipped half that, according to a Bloomberg survey.
