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Aussie rates cut to lowest in 45 years
Bill Condie3 Feb 2009
Australia, which still has more room to manoeuvre than the Bank of England, cut interest rates today by one percentage point to 3.25%.
The Bank of England is set to cut UK rates by half a point to 1% this week.
The Australian overnight cash rate is now the lowest the country has seen in 45 years.
The government followed the cut with the announcement of a further A $42 billion (£18.79 billion) injection of funds into the economy.
Reserve Bank of Australia Governor Glenn Stevens said the cut was due to the global recession and declining commodity prices which “has had a significant dampening effect on confidence”.
Finance minister Wayne Swan said the government will spend A$12.7 billion on handouts to families and A$28.8 billion on infrastructure, sending the budget into its first deficit since 2002.
Aussie miners and other commodity producers are seeing prices collapse on lower demand which has caught up with the economy after five years of a resources boom.
