Moving in line with expectations the Reserve Bank of Australia (RBA) has cut the nation’s official interest rate for the second straight month, slicing off 25 basis points at its June board meeting.
Australia’s benchmark interest rate now sits at 3.5 per cent after a cut of 50 basis points last month, amid concerns the domestic economy is being impacted by a global slowdown.
Today’s cut brings the rate to the lowest level since November 2009, putting the pressure onto the major banks to pass the cut onto customers.
RBA governor Glenn Stevens says financial market sentiment has deteriorated over the past month. The RBA Board “judged that, with modest domestic growth and a weaker and more uncertain international environment the outlook for inflation afforded scope for a more accommodative stance of monetary policy."
It may not be the last we’ve seen of cuts this year: Westpac Banking Corporation (ASX:WBC) chief economist Bill Evans correctly predicted today’s RBA cut and expects the Central Bank to cut rates by 0.25 percentage points another three times this year.
The prediction would see Australia’s official cash rate drop to a record low of 2.75 per cent by year’s end, down from a rate of 3 per cent following the global financial crisis.
