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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 $0.6983, 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 $0.6950 after the RBA’s decision and stabilize ahead of the expected comments from Mr. Lowe.

This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

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