RBA lowers interest rates
THE Reserve Bank (RBA) last week lowered official interest rates by 25 basis points to 2.75 per cent.
Despite the cash rate moving to historic lows, the average standard variable mortgage rate, which is now likely to be 6.2 per cent, is still 45 basis points higher than the 2009 lows.
Overall it appears that the RBA cut interest rates because the exchange rate remains high making business tough for exporters and because economic growth and inflation is at below trend levels providing the RBA with the necessary impetus to cut rates. Some of the comments suggest that there may be additional interest rate cuts to come; that is the view of financial markets, which are pricing in another rate cut around August according to the ASX cash rate futures implied yield curve.