The Reserve Bank of Australia (RBA) has cut the country’s official cash rate by 50 basis points, bringing the country’s interest rate to 3.75 per cent.

 

In making the announcement, RBA Governor Glenn Stevens said a slower than expected world economy was key in informing the board’s decision.

 

Below trend output growth, combined with a slackening CPI increase were also considered major influences in the board’s decision to make the largest cut to the rate since February 2009, where it dropped the rate by 1 per cent.

 

“In considering the appropriate size of adjustment to the cash rate at today's meeting, the Board judged it desirable that financial conditions now be easier than those which had prevailed in December,” Mr Stevens said.

 

 A reduction of 50 basis points in the cash rate was, in this instance, therefore judged to be necessary in order to deliver the appropriate level of borrowing rates.”