RBA drops cash rate by 0.25%
At its meeting today, the RBA decided to lower the cash rate by 25 basis points to 4.5 per cent, effective 2 November 2011.
This is great news for home loan borrowers and for people looking to buy a property.
Here is an extract of the statement by Glenn Stevens, Governor of the RBA, on why they took this decision:
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"Recent information is consistent with a moderation in the pace of global growth, though fears of a major downturn have not been borne out so far....
Financial markets have recovered somewhat from the turmoil of recent months, helped by stronger economic data in the United States and by signs that European governments are making progress in their efforts to deal with the sovereign debt and banking problems....
Information about the Australian economy suggests moderate growth overall....
The unemployment rate has increased a little over recent months, though it remains close to 5 per cent....
After underlying inflation started to pick up in the first half of the year, recent information suggests the subdued demand conditions and the high exchange rate have contained inflation more recently, notwithstanding continuing sizeable increases in utilities charges....
Accordingly, the Bank's current judgement is that inflation is likely to be consistent with the 2–3 per cent target in 2012 and 2013, abstracting from the impact of the carbon pricing scheme....
Financial conditions have been easing somewhat recently, with market interest rates declining a little and competition to lend increasing...
Over the past year, the Board has maintained a mildly restrictive stance of monetary policy, in view of its concerns about inflation. With overall growth moderate, inflation now likely to be close to target and confidence subdued outside the resources sector, the Board concluded that a more neutral stance of monetary policy would now be consistent with achieving sustainable growth and 2–3 per cent inflation over time."
Whilst it is hoped that all lenders pass on this reduction in full, this is by no means guaranteed.
With access to home loan products from a variety of lenders across Australia, we are well placed to help you find the best home loan for your particular circumstances.
If you are in the market for a home loan, or simply want to know what this change in rate could mean in terms of repayments, please get in touch.
