The Reserve Bank has cut the cash interest rate by 25 basis points and the major banks are moving to lower their mortgage rates in response.
Westpac and the Commonwealth Bank were the first of the majors to announce cuts, while ANZ and the NAB say they have their rates under review.
Sonya Harris reports.
The Reserve Bank of Australia has indicated it is comfortable with the outlook for inflation.
The bank announced today that the cash rate has been cut by a quarter of one per cent to 4.75 per cent.
Westpac was the first major bank to respond by cutting its variable home loan rate by the full amount of the RBA cut.
Bill Evans, Westpac: “I think it’ll be quite positive for confidence. It’ll certainly help sectors like the housing market and the retail sector.”
The move by at least three major banks to cut their rates, in line with the Reserve Bank’s decision, is a relief for Australian families facing cost-of-living pressures.
Repayments on an average $250,000 mortgage will be reduced by about $41 a month.
The National Retail Association says the rate cut is great news for the Queensland retail and services industries.
Gary Black, Executive Director, National Retail Association: “What retailers will see is, I think, some renewed confidence on the part of consumers. Consumers will be more willing to spend because the signal of the Reserve Bank will be to the effect that the economy is improving, that consumers ought to get out and start spending. So they’ll take the hint and it’ll certainly revitalise the retail sector in the lead up to Christmas.”
The decision was widely tipped, with 11 of 17 economists surveyed by newsagency AAP, predicting a cut.
It is the first official cut to the cash rate in two years.
Sonya Harris, QUT News.