Australia makes surprise 0.75% interest rate cut
The Reserve Bank of Australia (RBA) has surprised the market today by cutting its key interest rate from 0.75% to 5.25%.
In line with many other countries, the move was made in a bid to stave a recession. Central banks in the US, Japan and China have all cut interest rates in the last week in a bid to fight off a recession.
Many analysts believe that the Bank of England and European Central Bank will follow suit later this week.
Most analysts had expected the RBA to cut interest rates by 0.5%, it was third cut since September and interest rates in the country are now at their lowest since March 2005.
In addition, the Australian Government announced a stimulus package of AUS$10.4 billion ($6.9 billion; £4.4 billion) to boost growth.
Commenting on the package, the RBA’s Governor, Glenn Stevens, said international economic data have continued to point to significant weakness in the major industrial economies, and there have been further signs that China and other parts of the developing world are slowing as well.
This is the additional rate relief that Australian families and businesses need in the face of the global financial crisis. It will strengthen our economy at a vital time, concluded Mr Stevens.
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