Australian Reserve Bank cuts cash rate to historic low of 1.5%


THE Reserve Bank is rapidly running out of ammunition to stimulate the economy, cutting the official cash rate by 25 basis points to a new historic low of 1.5 per cent.

The central bank last moved in May with a shock Federal Budget day cut to 1.75 per cent, citing weak inflation data, after 12 months of leaving rates on hold.

The move is good news for borrowers but comes as yet another kick to retirees, who have had the interest earned on their savings accounts wiped out by 12 rate cuts since 2011.

“If you had a $300,000 mortgage with an average standard variable rate of 4.93 per cent and manage to get the full discount of 0.25 per cent off your interest rate, this could pocket you almost $50 per month, or a whopping $16,325 over the life of your loan,” said Graham Cooke, insights manager at comparison website

However, for a saver with a 12-month term deposit at the average rate of 2.58 per cent, a 25 basis point cut would reduce their income by $750 for a $300,000 deposit and up to $1250 for a $500,000 deposit, according to Canstar.

Finance commentator Alan Kohler described the cut as “another cruel blow to retirees”.

“Self-funded retirees are being forced into riskier and riskier assets to try to add some meat to the three veg on their dinner plates, so [RBA] Governor [Glenn Stevens] and his colleagues can do their macroeconomic duty,” he wrote on Monday.

Economists had tipped further weak June quarter inflation data and a stubbornly high Australian dollar would force the RBA to cut again, despite fears of reigniting the housing market.


this is not a healthy sign..but if you look at it with a glass half full attitude then they have another 6 rate cuts they can enforce before hitting zero.. *sigh

“THE Reserve Bank is rapidly running out of ammunition to stimulate the economy”



~ by seeker401 on August 3, 2016.

One Response to “Australian Reserve Bank cuts cash rate to historic low of 1.5%”

  1. suffer the little self-funded pensioners.. no tea for you
    (pls. play the stock mkt for some income 🙂 )

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