Interest rates cut to a 45 year low
Tuesday February 3, 2009
This afternoon the RBA slashed interest rates by 100 basis points to 3.25 percent, making interest rates the lowest they have been since 1964.
Rates have been cut by 400 basis points since September 2008 in attempts to boost Australia's flagging economy.
The Reserve Bank took into account the stimulus package announced by the Government this morning. The combination of expansionary monetary and fiscal policies now in place may help to cushion the Australian economy from the overseas economy issues.
The stimulus package is a $42 billion stimulus package designed to boost the economy and includes cash handouts to eligible low to mid-income earners.
Prime Minister Kevin Rudd and Treasurer Wayne Swan have urged Australia's banks to pass on the rate cut to cash-strapped homeowners in a timely way. Australia's banks are currently considering potential interest rate cuts.
If the banks pass on the full 1 percent, homeowners with an average $250,000 on variable mortgages will see potentially $162 taken off their monthly payments.
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