The Reserve Bank has surprised the majority of economists by cutting the cash rate by 25 basis points to 3.25% at its October monetary policy meeting today.
This is the lowest the cash rate has been since October 2009.
It is only one 25-basis-point rate cut off the record low of 3%, which was in place from April 2009 to September 2009. This followed the RBA cutting the cash rate by over 400 basis points between August 2008 and April 2009 to keep the economy ticking over in the wake of the GFC.
Only nine economists polled by Bloomberg last Friday tipped the RBA to cut the cash rate today.
The RBA cut the cash rate despite median property values rebounding by more than 2% in the five capital cities (Sydney, Melbourne, Brisbane + Gold Coast, Perth and Adelaide) quarter-on-quarter in September, according to RP Data-Rismark’s daily index.
However, mortgage lending and retail sales have been weak, while concerns remain about the global economy and the Chinese economy in particular.
The major banks and other lenders are expected to announce how much of the rate cut they will pass on to borrowers in the next few days.
ANZ will make its monthly independent interest rate decision on Friday, October 12.