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April 7, 2009

Australia cuts rates to 3%

by Richard Kilner

Story link: Australia cuts rates to 3%

The Reserve Bank of Australia has chosen to reduce interest rates by 25 basis points, meaning that from 8 April they will stand at 3%.

Previously, in March, interest rates in Australia had been kept steady at 3.25%.

In a press statement the bank indicated that the economic contraction was continuing and as such, short-term forecasts would have to be amended.

Some countries, including China, have begun to show tentative signs of stabilisation, though these will only be confirmed as firm in due course.

After the economic and financial maelstrom of Q4 2008, the world’s financial sector continues to slowly progress, and although Australia’s economy is contracting it is not doing so as sharply as many of its competitors.

Indeed, the UK presently has a rate of merely 0.5%, its lowest ever, with the eurozone rate standing at 2.25%.

Although the lower rates will act to stimulate the UK and eurozone economies, they will also hit savers hard, particularly as food inflation persists.


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