In a statement Governor Glenn Stevens explained that estimates of global GDP had declined in recent months, as the European economies continue to contract. Growth in the US remains modest, and Chinese growth has slowed, dampening prospects for the entire region. In Australia itself growth is running close to trend, with inflation remaining low.
The Reserve Bank has forecast that inflation will be on target during the next one to two years, and that predicted growth was now lower than had been the case some months ago. In light of inflation being on target but expected growth declining the Reserve Bank elected to cut rates slightly. The most recent previous cut was in June of this year, when rates were reduced by 25 basis points to 3.5%.
Source:
bankingtimes.co.uk
