Australia’s central bank cuts interest rates to record low of 1.00%
In the announcement on Tuesday, RBA’s governor Philip Lowe said: ‘This easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.’
The Reserve Bank of Australia (RBA) on Tuesday said it had cut rates by another 25 basis points to a record low of 1.00% to support employment growth and to provide for a consistent inflation in the medium term.
Australia’s central banks follows a more reserved stance seen from central banks globally as the global economy faces headwinds amid trade uncertainties.
Last month, the RBA cut rates for the first time in three years, over concerns on a weak economic growth. Economists in a Reuters survey are expecting for a rate cut to 0.75% by the end of this year.
Rate cut to prop up the Australian economy
In the announcement on Tuesday, RBA’s governor Philip Lowe said in a statement: ‘This easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.’
IG market analyst Kyle Rodda commented that the looser monetary policy conditions will ‘support further gains in the jobs market, and lead to the necessary wage growth, consumption growth and price inflation the economy requires’.
However Mr Rodda pointed out that although the cuts are coming, the RBA has ‘also implored recently that cutting interest rates alone won’t be sufficient to stimulate the economy, suggesting fiscal support is also necessary to support economic activity’.
The Australian dollar was little changed on Tuesday at US$0.6983, at around 6.41am GMT, IG data showed. The currency had slumped 0.9% on Monday, its biggest fall since April 24, this year.
Currency experts expect the Aussie to dip below US$0.6950 after the RBA’s decision at around 4.30am GMT and stabilize ahead of the expected comments from Mr Lowe at 9.30am GMT.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.