Rate Decrease of .25% – RBA Announcement for August 2013

As was widely anticipated by surveyed economists, the Reserve Bank of Australia announced a decrease of 0.25% (http://www.rba.gov.au/media-releases/2013/mr-13-15.html), taking the cash rate to a low of 2.5%.

Governor Glenn Stevens had hinted at this in a speech last week, and today’s announcement notes that recent information on prices and activity were the impetus for the lowering of the cash rate. Unemployment has edged higher (and the latest mini-budget forecasts that trend to continue for the next one to two years), and with headline inflation weaker than expected, the RBA hopes to support demand and build business confidence and investment.

It is expected that the banks will to pass on all of the decrease due to lower funding costs.

If you would like to discuss what this means for you, please contact us