RBA cuts rates

The Reserve Bank of Australia has stripped 25 basis points from the official cash rate, taking it to the all time low of 3 per cent.

The rate cut means the Reserve Bank has now slashed 125 basis points from the cash rate over the last 12 months.

While the official rate now sits at the historic low of 3 per cent, economists weren’t surprised by the rate cut and believe the RBA could tighten the cash rate further still in the New Year.
For many parts of the economy, interest rates remain high given the subdued level of business conditions.

This is particularly true at a time when the Australian dollar has remained elevated.

Further monetary easing is necessary to assist the economy in its transition towards a lower dependence on mining investment growth.
We continue to expect the Reserve Bank to maintain a strong easing bias in 2013.



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