RBA Surprisingly Cuts Interest Rates to 3.25%, Aussie Under Pressure - 2.10.2012
The Reserve Bank of Australia decided earlier today at its meeting to cut the Cash Rate by 25 basis points to 3.25 per cent while market participants were expecting RBA to leave it unchanged. RBA Governor at its statement said “…the Board judged that, on the back of international developments, the growth outlook for next year looked a little weaker, while inflation was expected to be consistent with the target. The board therefore decided that it was appropriate for the stance of monetary policy to be a little more accommodative”.
Furthermore, the RBA cuts the interest rate to the lowest level since October 2009 as employment growth is modest and falling demand for the Australian commodities set pressure on the terms of trade. The Aussie weakened against the greenback after the RBA release and dropped from 1.0375 to 1.0290 or declined by 0.80%.