The RBA has slashed cash rates to stimulate the slowing economy.
The central bank of Australia has slashed rates by 1.25 percent which is a record low. On Tuesday, the bank has taken the first step towards stimulating the economy.
With the country’s economic slowdown, policymakers had to take the stimulus measure to revive the economy. Over a period of three years, this is the first time that the RBA has lowered rates. Rates have been reduced from 1.5 percent to 1.25 percent.
Philip Lowe, the RBA governor says that this measure will help to reduce unemployment and will boost inflation. He is expected to deliver a speech tonight which will bring in more details.
Lowe further says that the economy will see a 2.75 growth by the end of the year. The U.S and China trade war has affected the growth of all countries across the globe.
Data to be released o Wednesday is expected to show slowing annual growth in the economy, the lowest in a decade by 1.8 percent. It is expected to be A$1.9 trillion.
The Australia dollar went up to $0.6987, an increase of 0.15 percent after the announcement about the rate cut was made.
Analysts expect a further rate cut by the end of September and a third rate cut by the end of the year.
Central banks across the globe are loosening their monetary policies to revive their economies. The global slowdown has affected all countries.
Australia has been avoiding a recession for more than a decade. However, statistics about the economy is not good currently. Consumer spending has gone down, home prices have fallen, unemployment is on the increase and inflation is sluggish. Even during the global meltdown in2008, the cash rates were above the inflation rate by 1 percent, say analysts.
The ASX200 was up by 15 points at 6336, a rise of 0.25 percent.