RBA cuts interest rate by 0.75 percent
4/11/2008 15:27
The Reserve Bank of Australia (RBA) cut its key interest rate today by
three-quarters of a percentage point to 5.25 percent from 6.0 percent.
RBA
governor Glenn Stevens made the announcement today in a statement emerging from
RBA's monthly board meeting.
He said the recent reductions in borrowing
rates, the depreciation of the exchange rate and the fiscal stimulus announced
in October will work to assist growth in the period ahead.
"But deteriorating
international conditions and falling commodity prices will have a dampening
influence," Stevens said.
The central bank cut the rate by a surprise one
percentage point last month to prevent the economy being dragged into a
recession in the face of a deepening global financial crisis.
Economic data
since then has proved grim reading, pointing to rising unemployment, falling
house prices and weak consumer spending.
"Global disinflationary forces will
assist in this regard, though the depreciation of the exchange rate means that
the decline of inflation to the target could take longer than would otherwise be
the case," said Stevens.
"Weighing up these international and domestic
developments, the board judged that a further significant reduction in the cash
rate was warranted. The board will continue to monitor developments and make
adjustments as needed to promote sustainable growth consistent with achieving
the 2-3 per cent inflation target over time," Stevens said.
Meanwhile, the
decision to again cut official interest rates was welcomed by business circles.
New South Wales Business Chamber chief executive Kevin MacDonald said today the
rates cut would boost business confidence.
But he called on the retail banks
to pass on the full 0.75 percentage point rate cut, particularly in the area of
business- related lending.
"Business operators are feeling the heat at the
moment, with the economy slowing and the cost of doing business on the rise,"
MacDonald said in a statement.
Xinhua
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