Australian interest rates cut to 2.75 per cent

The central bank has cut the cash rate by 175 basis points over the past 12 months and hinted that it was ready to cut again if further stimulus were needed.

 

"The board has previously noted that the inflation outlook would afford scope to ease further, should that be necessary to support demand," central bank governor Glenn Stevens said. "At today's meeting the board decided to use some of that scope." The easing of monetary policy came after figures showing inflation was benign and that earlier cuts were yet to show up in higher retail spending and greater business investment.

 

Stevens said the bank's decision to cut rates reflected moderate price increases and an Australian dollar that was hurting the manufacturing sector.

 

"The exchange rate ... has been little changed at a historically high level over the past 18 months, which is unusual given the decline in export prices and interest rates during that time," he said. "Moreover, the demand for credit remains, at this point, relatively subdued."