Australia cuts key interest rate to record low 0.75%

Andrew Cummings
October 3, 2019

"We were able to match the full rate reduction in July and the majority in June, however the dynamics of record low interest rates has resulted in a reduction in variable home lending rates of between 0.14% and 0.25% this time around".

"We haven't seen the jump in retail sales we were hoping for, and we are still waiting to see the flow-on effects of earlier rate cuts, tax cuts, and increases to the minimum wage", Zimmerman said.

Westpac Banking Corp and Australia and New Zealand Banking Group joined the country's other "Big Four" lenders in skipping the chance to pass on the central bank's rate cut in full to customers due to ever-thinning margins.

"If they were so good at managing the economy the Reserve Bank wouldn't have had to cut rates again today", he told reporters in Brisbane.

The RBA will kick off the fourth quarter of the year with its October interest rate decision slated for Tuesday at 4:30 GMT and brings Australian Dollar currency pairs into focus. "What this means for an Australian family with a mortgage of $400,000 is $720 less a year in interest payments", Frydenberg said.

Followers on twitter in general reacted with disappointment, seemingly frustrated that CBA did not pass the rate cut on in full.

"As the Reserve Bank itself has said, the cost of borrowing, for the banks, has come down ... that is why it should be passed on".

"The board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time", he said.

"The banks need to pass on the interest rate cut in full and the Government need to do something about, they cant just sit back as spectators while all of this occurs", Mr Albanese said. "This has particularly affected discretionary spending in small retail businesses, including cafes and restaurants", chief executive James Pearson said.

Many, including Treasurer Josh Frydenberg, remain skeptical of the appropriateness of Australia's largest players failing to pass through the entire 25bps cut.

AMP chief economist Shane Oliver, who has a strong track record forecasting the central bank's actions, said the central bank was not done yet, predicting another drop on Melbourne Cup Day.

"There is a risk that we're spending down our recession insurance", Richardson told Sky News before the cut was announced.

"In making the decision, we took into account the reduction of the official cash rate and the commercial pressures of the low interest rate environment".

Over the past three months, Sydney house values have lifted by 3.6% although they are still down by 0.9% so far this year.

The RBA says signs of a turnaround in the Sydney and Melbourne housing markets are promising, but new building activity has weakened and growth in housing credit remains low.

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