As finance ministers across the globe rally to discuss the flailing economy, Australia’s central bank is cutting interest rates in an effort to boost confidence throughout the nation.
The country’s overseas outlook is relatively bleak, and local growth is slow as well. The Reserve Bank of Australia has minimized its cash rate to 3.5%, 25 basis points lower than before. So far, the domestic dollar has been influenced little. The bank’s move was expected by many.
“The Board judged that, with modest domestic growth and a weaker and more uncertain international environment, the outlook for inflation afforded scope for a more accommodative stance of monetary policy,” said Glenn Stevens of RBA.
Wayne Swan, a treasurer, added:
“It’s a welcome decision. It is a win for households and it’s a dividend of returning our budget to surplus. The announcement today from the Reserve Bank gives Australians confidence that the RBA has further room to move, and of course a big part of that flexibility is the return to surpluss.”
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