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| Australia lowers rate to 4.5% in a bid to boost growth | Australia lowers rate to 4.5% in a bid to boost growth |
| (40 minutes later) | |
| The Reserve Bank of Australia (RBA) has cut interest rates in a bid to boost growth amid fears of a slowdown in the global economy. | The Reserve Bank of Australia (RBA) has cut interest rates in a bid to boost growth amid fears of a slowdown in the global economy. |
| The central bank lowered its key rate to 4.5% from 4.75%, the first cut since April 2009. | The central bank lowered its key rate to 4.5% from 4.75%, the first cut since April 2009. |
| The move comes amid fears that the debt crisis in Europe and slowdown in the US may hurt global economic growth. | The move comes amid fears that the debt crisis in Europe and slowdown in the US may hurt global economic growth. |
| RBA said it was concerned about the impact of global uncertainty on its economy, | RBA said it was concerned about the impact of global uncertainty on its economy, |
| "Information about the Australian economy suggests moderate growth overall," the bank said in a statement. | "Information about the Australian economy suggests moderate growth overall," the bank said in a statement. |
| "The terms of trade have now peaked and will decline somewhat in the near term," it added. | "The terms of trade have now peaked and will decline somewhat in the near term," it added. |
| Domestic Factors | |
| Apart from the global pressures, the central bank has also had to deal with a slowing domestic demand. | |
| While Australia's resources and mining sector have been booming, other areas of the economy such as retail sales have witnessed a slowdown in recent times. | |
| "In other sectors, cautious behaviour by households and the high exchange rate have had a noticeable dampening effect." the bank said. | |
| According to the latest data by the Housing Industry Association, new home sales in Australia fell to their lowest level in 11 years in September. | |
| Analysts said that as fears of a global slowdown gather pace, the central bank is worried that demand may fall further. | |
| "The RBA's decision to cut rates by 0.25% is an admission that domestic demand is feeling the pressure," said Peter Escho of City Index. | |
| "Clearly, the RBA is using its toolbox to cushion the impact," he added. |