RBA surprise rate drop to 2.75%


RBA

Logic Wealth Group would like to advise the latest cash rate percentage from the Reserve Bank as at the 7th  of May 2013 has been dropped to 2.75%.

The rising unemployment rate and slow home loan growth has forced the Reserve Bank to cut the official cash rate.

At its board meeting earlier today, the RBA decided it was prudent to cut the official cash rate 25 basis points, taking it to the historic low of 2.75 per cent.

The global economy is likely to record growth a little below trend this year, before picking up next year. Among the major regions, the United States continues on a path of moderate expansion and China’s growth is running at a more sustainable, but still robust, pace. Japan has announced significant new policy initiatives aimed at strengthening demand and ending deflation. The  euro area remains in recession. Commodity prices have moderated a little in recent months though they remain high by historical standards.

Financial conditions internationally  continue to be very accommodative, with risk spreads reduced, funding conditions for most financial institutions improved and borrowing costs for well-rated corporates and sovereigns exceptionally low.

Growth in Australia was close to trend in 2012 overall, but was a bit below trend in the second half of the year, and this appears to have continued into 2013.  Employment has continued to grow but more slowly than the labour force, so that the rate of unemployment has increased a little, though it remains relatively low.

The team here at Logic will keep you well informed of future rates as the future months draw upon us

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