- BRW Lists
Published 07 May 2013 14:34, Updated 07 May 2013 15:30
The Reserve Bank Of Australia has cut interest rates to a record low 2.75 per cent, but that’s not enough for maverick North Queensland MP Bob Katter - he’s taken to Twitter calling for them to come down “in line with the world average of 0.05 per cent” to avert Australia’s “cattle farming crisis”.
Another trade exposed sector saw some immediate benefits from the decision - building materials maker Boral saw its share price rally 9 cents immediately after the Reserve Bank’s 2.30pm decision.
In a statement accompanying the decision, Reserve Bank governor Glenn Stevens said: “The Board has previously noted that the inflation outlook would afford scope to ease further, should that be necessary to support demand.
“At today’s meeting the Board decided to use some of that scope. It judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target.”
Watch the Australian dollar, warned AMP chief economist Shane Oliver, noting that it had broken below its US$1.02-US$1.06 trading range of the last 10 months immediately after the RBA’s decision.
National Australia Bank immediately announced it would pass on the full 0.25 basis point cut, breaking the recent habit of the big four banks to deliberate for up to a week following an RBA rate announcement.
Big business welcomed the interest rate cut. Here’s what Australian Industry Group chief executive Innes Willox had to say: “The RBA’s decision to reduce the cash rate is a timely move to stimulate the slowing economy and will be welcomed by industry, particularly in the residential construction sector and the manufacturers and service providers linked to home building. Alone this will not act as a silver bullet to boost demand, but it is a welcome step to stimulate economic activity.
“In view of the clear slowdown in the domestic economy, there are real risks that next week’s Budget will further dampen business activity by excessively cutting spending or raising taxes. It is crucial that monetary and fiscal policy are aligned at this time.”