Good news for home owners but bad news for savers and pensioners. Australia joined the large club of nations shaving digits of their benchmark interest rates in an attempt to stimulate consumer demand and business.
With China slowing which in turn has sent Australia’s treasure, her natural commodities, plunging and by association put pressure on the unemployment numbers the central bank had to play its hand.
The Reserve Bank of Australia governor Glenn Stevens said in a statement “the board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand.”
He also said, “the Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices.”
Many will be watching the real estate market which itself has been receiving tweaks to let out steam and regulate the surging foreign inflows of capital.
So Australia joins the caravan of countries like Canada, China, India, Russia and dozens of others in the downhill race in diluting the economic waters.
However now that the predicted downward move has been made how long will it be before pressure mounts for the next trim.
