Australia cut overnight cash rate by 1%

Australia extends biggest rate-cut round since 1991;
Report and analysis by Susan Li of Bloomberg News
Video courtesy of Bloomberg via ClipSyndicate
According to Bloomberg, Glenn Stevens, Governor of Reserve Bank of Australia today announced the overnight cash rate cut by 1% to a six-year low of 4.25 percent, the fourth reduction in as many months and an extending the biggest round of reductions since the nation was last in a recession in 1991.

Four of 21 economists surveyed by Bloomberg News forecast today’s move and 15 tipped a three-quarter point cut.

Stevens also said monetary policy is now “expansionary” to help restore consumer and business confidence, which has been battered by this year’s 44 percent slump in the benchmark stock index and the biggest drop in house prices since 1978. Three percentage points of cuts since September save borrowers with an average A$250,000 ($159,000) home loan more than A$500 a month.

The Reserve Bank expects the inflation rate will fall back within its target range of between 2 percent and 3 percent in 2010.

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Sources :

Bloomberg: Australia Extends Biggest Rate-Cut Round Since 1991 (Update3), December 2, 2008 00:56 EST

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