http://au.pfinance.yahoo.com/home-loans/features/interest-rate-feb-09/index.html
New Year, New Lows - Interest Rates Cut Again
In a not-so-surprising move, the RBA slashes interest rates by another full percentage point.
Aussie battlers (homeowners, that is) received further relief today as the RBA met for the first time this year to discuss and cut interest rates in response to the rising tide of gloomy economic data.
Their decision? Slash interest rates by a further 100 basis points (one percentage point). This takes the official cash rate down to 3.25 percent, the lowest level since February 1964.
This is the fifth consecutive rate cut, as rates have already been slashed by 300 basis points since September last year, reversing a dozen rate rises between 2002 and early 2008.
The Reserve Bank over the last couple of months has surprised all and sundry with the size of its cuts, and this month was no exception.
Economists say the Reserve Bank is largely free to concentrate on stimulating the economy, with inflation deteriorating rapidly.
The official annual rate of headline inflation slowed from 5 per cent to 3.7 per cent in the December quarter.
ICAP economist Adam Carr says the sharp slump in inflation last quarter is helping the RBA focus solely on boosting the economy, hence the rate cuts.
"They have come to the view that they need to stimulate the economy as quickly as possible and certainly the concerns they had last year about inflation seem to ... have dissipated completely," he said.
By the end of September 2009, the cash rate could hit a record low of 2 per cent, economists say.
Will the banks pass it on?
Consumer advocates and the housing industry called on the banks to pass on any rate cut in full.
If the banks pass on the one percentage point move, homeowners with an average $250,000 on a variable home loan will see $162 shaved off their monthly payments.
"If they don't (pass on the full rate cut), that's going to be pretty damaging for confidence levels that are pretty weak already," said Harley Dale, Housing Industry Association chief economist.
But none of the big four banks are making any promises.
"It is in no one's interest for rates to remain high," an ANZ spokeswoman said.
"There remains considerable uncertainty about the global economic outlook, and financial markets remain very volatile."
Click here to stay up to date on the banks decision to pass on the rate cut.
Interest rates full coverage.
New Year, New Lows - Interest Rates Cut Again
In a not-so-surprising move, the RBA slashes interest rates by another full percentage point.
Aussie battlers (homeowners, that is) received further relief today as the RBA met for the first time this year to discuss and cut interest rates in response to the rising tide of gloomy economic data.
Their decision? Slash interest rates by a further 100 basis points (one percentage point). This takes the official cash rate down to 3.25 percent, the lowest level since February 1964.
This is the fifth consecutive rate cut, as rates have already been slashed by 300 basis points since September last year, reversing a dozen rate rises between 2002 and early 2008.
The Reserve Bank over the last couple of months has surprised all and sundry with the size of its cuts, and this month was no exception.
Economists say the Reserve Bank is largely free to concentrate on stimulating the economy, with inflation deteriorating rapidly.
The official annual rate of headline inflation slowed from 5 per cent to 3.7 per cent in the December quarter.
ICAP economist Adam Carr says the sharp slump in inflation last quarter is helping the RBA focus solely on boosting the economy, hence the rate cuts.
"They have come to the view that they need to stimulate the economy as quickly as possible and certainly the concerns they had last year about inflation seem to ... have dissipated completely," he said.
By the end of September 2009, the cash rate could hit a record low of 2 per cent, economists say.
Will the banks pass it on?
Consumer advocates and the housing industry called on the banks to pass on any rate cut in full.
If the banks pass on the one percentage point move, homeowners with an average $250,000 on a variable home loan will see $162 shaved off their monthly payments.
"If they don't (pass on the full rate cut), that's going to be pretty damaging for confidence levels that are pretty weak already," said Harley Dale, Housing Industry Association chief economist.
But none of the big four banks are making any promises.
"It is in no one's interest for rates to remain high," an ANZ spokeswoman said.
"There remains considerable uncertainty about the global economic outlook, and financial markets remain very volatile."
Click here to stay up to date on the banks decision to pass on the rate cut.
Interest rates full coverage.
