Australia’s interest rates slashed to history-making 0.10 per cent

Australia’s official cash rate has plunged to 0.10 per cent, marking the lowest interest rates in the nation’s history. Economists of the Reserve Bank of Australia (RBA) today decided to slash rates in a bid to stimulate the country’s economy out of a COVID-19-driven recession. It’s the third time interest rates have been cut this year. In January 2020, the official cash rate was 65 basis points higher at 0.75 per cent.

In his monetary statement, RBA Governor Philip Lowe said the reasoning behind the cut was to provide credit to more Australians.”At its meeting today, the Board decided on a package of further measures to support job creation and the recovery of the Australian economy from the pandemic,” Mr Lowe said.”With Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can to support the creation of jobs.

Graham Cooke, Insights Manager at Finder, said it’s the first time since 2011 that the central bank has cut rates on Melbourne Cup day. “For the first time since 2011, the RBA has declared a Cup Day cut despite some skepticism from experts around the effectiveness of further monetary stimulus measures,” Mr Cooke said. “But significant considerations like the strength of the Australian dollar and a lagging Victorian economy have supported the case for further easing. “I suspect the horse races weren’t the only thing punters were betting on today.”

Treasurer Josh Frydenberg welcomed the rate cuts today, saying it will help families lift the country out of a recession.”For someone with a $400,000 mortgage, the average across the country, what we have seen with today’s announcement where it has come from down 75 basis points to just 10, that is worth $1,000 a year for someone with a mortgage that size,” Mr Frydenberg said.”Some of the banks have already priced in today’s announcement by the Reserve Bank, it had been highly forecast and highly expected.”


Australia’s interest rate – also known as the country’s “cash rate” – is the amount of money every bank has to pay on the money it borrows. Typically when the RBA lowers interest rates, Australia’s major lenders follow. The lower the interest rate on a loan you have with a financial institution, the less money you have to pay back. So what does today’s cut mean for you?

For many mortgage holders, the difference could be just a few more dollars in your pocket every month. If your bank passes the full rate cut on – and that is an “if” – the average mortgage holder could have an extra $33 a month.”With existing home and business borrowers unlikely to see much of the cut and the former unlikely to spend it even if they do, the stimulus of a rate cut to the economy will be very modest,” Canstar Group Executive of Financial Services Steve Mickenbecker said.”Borrowing rates are so low already that a cut is largely irrelevant.”Even if passed on fully, a cut of 0.15 per cent to the average $400,000 over 30 years will lower the monthly repayment by $33, not enough to make much of a difference to borrowers’ spending and house purchase intentions.”