RBA drops interest rates
7 October 2008
Today the Reserve Bank of Australia (RBA) announced that interest rates will be slashed by a full percentage point. The last time interest rates were cut by a full percentage was in May 1992.
There was speculation that the RBA would drop interest rates by 50 basis points, however the markets were suprised by the full 100 basis point decrease.
The RBA Governor, Glenn Stevens, said that the unusually large rate cut was necessary to help lower costs to borrowers. While Australia has been affected by the recent overseas financial trouble, measures are being taken to help protect the Australian economy from the global credit crisis.
The interest rate decrease had an immediate affect on the Stock Market and the All Ords jumped up over 100 points shortly after it was announced.
It is uncertain at this point whether banks will pass on the full interest rate cut to home loans and if this will flow on to other loan products like credit cards or personal loans.
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