Newspaper article News Mail Bundaberg Qld.

RBA Right to Cut Rates Ahead of Christmas

Newspaper article News Mail Bundaberg Qld.

RBA Right to Cut Rates Ahead of Christmas

Article excerpt

MORTGAGE broker network 1300HomeLoan has backed the Reserve Bank of Australia's decision to cut official interest rates by 25 basis points ahead of the crucial Christmas trading period.

Managing director John Kolenda said the RBA decision at its board meeting Tuesday should ensure that consumers were out in force in the lead up to Christmas.

aThere are many dark clouds hovering over the economy as growth in China slows and they should be held at bay by this rate cut,a Mr Kolenda said.

aThis is the right decision because there is a minimal threat of inflation and it will help our key employment industries which are really struggling right now.a

Mr Kolenda said that manufacturers were under pressure because high official interest rates had been pushing up the Australian dollar which was making them uncompetitive with imports. At the same time, consumer confidence was low because of the weak international economy, weak property market and high cost of living.

aMining, construction and retail are still in the doldrums along with the high Aussie dollar and all these signs point to a push for rates to be eased,a Mr Kolenda said.

aThe RBA seems to have learnt the lesson from its needless delay in cutting rates earlier this year and hopefully, they will also squeeze in another cut before Christmas.a

The official interest rate is now 3.25%. Rates were last this low in October 2009.

The 25 basis point fall is the fifth rate cut the Reserve Bank has made since November last year. Rates have now fallen 1.5% since the current cycle of easing began. The cut comes after recent revelations that the domestic economy is slowing and amid renewed fears for the health of the global economy.

The Reserve Bank faced a mixed bag of data when it met on Tuesday including cooled commodity prices and state and federal budget cuts on the horizon. …

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