RBA Cuts Rates by 25 Points

The Reserve Bank of Australia (RBA) announced a 25-point cut in cash rates after its final meeting for the year on Tuesday.

The announcement confirmed market expectations of a final rate cut by end of the year. This brought down rates from 3.25 per cent to three per cent, a figure at par with the lowest rate in April 2009 during the height of the global financial crisis. Analysts expect two further rounds of cuts by the middle of next year, potentially putting rates at 2.5 per cent.

The RBA will meet again on February 5 next year.

RBA Governor Glenn Stevens said in a statement that the cuts, "will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time." The RBA's outlook of the global economy remains subdued, while volatility persists in some areas of the local market.

Meanwhile, the value of the Australian dollar recovered from last week's dip after the RBA's announcement. From Monday's ¥85.64, it jumped to ¥85.71 the following day. Australian bonds were also up slightly following the cut, with 10-year bond futures contract up from 96.900 to 96.910, while three-year bond futures contract was at 97.390 from the previous 97.380.

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Published on December 12-th, 2012 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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