Australia cuts rates to all-time low of 1pc

Business | 2 Jul 2019 1:32 pm

Australia’s central bank cut interest rates for the second time in as many months today as it strives to revive a sluggish economy and reduce unemployment, a tough task that may yet require even more stimulus.

The Reserve Bank of Australia’s (RBA) quarter-point cut took cash rates to an all-time low of just 1 percent and left limited room for more reductions, raising the possibility of unconventional policy easing.

RBA governor Philip Lowe kept the door open for futrther rate cuts. "It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target," he said in a  statement.

"The board will continue to monitor developments in the labour market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time."

He said that "the uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy are tilted to the downside."

The rate cut also piled pressure on the newly re-elected Liberal National government to respond with fiscal stimulus of its own, something the central bank has been crying out for.

“This easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target,” said Lowe.-Reuters/The Standard. Photo: AAP 

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