The Reserve Bank of Australia has lowered the cash rate 0.25% to 4.5%.
This is the first movement in interest rates since November last year.
Reserve Bank Governor Glenn Stevens said there had been a “moderation in the pace of global growth, though fears of a major downturn have not been borne out so far”. He said trade performance “is starting to see some effects of a significant slowing in economic activity in Europe” and noted that commodity prices “have generally declined over recent months”.
Statement from Glenn Stevens, Governor of the Reserve Bank.
At its meeting today, the Board decided to lower the cash rate by 25 basis points to 4.5 per cent, effective 2 November 2011.
Recent information is consistent with a moderation in the pace of global growth, though fears of a major downturn have not been borne out so far. The pace of US economic expansion picked up in the September quarter, but is still only moderate and leaves considerable spare capacity. China’s growth has slowed, as policymakers there had intended. Output in Asia has now recovered from the effects of the Japanese earthquake, and domestic demand in the region is generally expanding. Trade performance, however, is starting to see some effects of a significant slowing in economic activity in Europe, where the prospects are for economic weakness to continue. Commodity prices, while still at high levels, have generally declined over recent months.