RBA Cuts Rates by 0.5% - 1.5.2012
The Reserve Bank of Australia decided today to lower the cash rate target by 50 basis points to 3.75%. The nation’s currency dived against the US dollar in Asian trading hours from 1.0430 to 1.0317 after touching last Friday a five-week high 1.0475. The Bank said in a statement that “economic conditions have been somewhat weaker than expected, while inflation has moderated” providing scope for monetary easing. At the same time the Board noted that “the persistently high exchange rate” was one of the factors which contributed to slowing growth pace.
As for price stability, both the underlying inflation and the CPI inflation declined in the recent months, according to the statement. Over the coming one to two years, the bank said, “inflation will probably be lower than earlier expected, but still in the 2%–3% range”. Another report from Australia showed house prices decreased in the first quarter of the year by 1.1%, more than expected, putting even more pressure over the aussie.