The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to a new record low of 1%. Yep, that’s right, back-to-back rate cuts within just one month.
The RBA last cut the official cash rate to the previously historic low of 1.25% on June 4, which also happened to be the first rate cut in almost three years (since August 2016).
Why the RBA has made back-to-back cuts
RBA Governor Philip Lowe says this second rate cut in as many meetings was made to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.
“The outlook for the global economy remains reasonable. However, the uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy are tilted to the downside,” he says.
Lowe adds that while conditions in most housing markets remain soft, there are some tentative signs that prices are now stabilising in Sydney and Melbourne. Growth in housing credit has also stabilised recently.
“Today’s decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target,” Lowe says.
Want to know what this rate cut means for your home loan?
On the back of this RBA decision, you may see a number of lenders advertising interest rate cuts.
You’ll also probably hear a lot of talk about whether lenders will pass on the full cut, a partial cut, or not at all.
Now, with two RBA cuts so close together, it might get a bit confusing as to whether lenders have passed on this rate cut, or only the one before it.
The good news is we’re following the market closely and can tell which lenders are passing this second rate cut on to their customers in full, and which lenders aren’t.
So if you’d like to find out, then please get in touch – we’d love to help break it down for you.
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