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Rates pointer as Oz cut is bigger than expected
Bill Condie, Evening Standard04.11.08
Australia's central bank has cut its benchmark interest rate by a larger-than-expected three-quarters of a point, adding to expectations that the Bank of England and European Central Bank will also make reductions this week.
The Reserve Bank of Australia lowered the overnight cash rate target to 5.25% from 6%.
That follows a surprise reduction of a full percentage point last month.
The Bank of England and the ECB are due to consider rates on Thursday. Economists expect the BoE to reduce its key rate by half a point to 4%.
The ECB is forecast to cut its benchmark rate from 3.75% to 2.5% by April in stages starting on Thursday.
Some analysts believe that there may even be a steeper cut of one percentage point as British interest rates are still higher than the eurozone.
But not all agree. Ross Walker, UK economist at the Royal Bank of Scotland, thinks it would make sense for the Bank of England to "drip-feed the good news" over several months as it reduces its benchmark rate to 2.5%.
