AUSTRALIA CUTS RATE FULL PERCENTAGE POINT
October 7th, 2008Via: Bloomberg:
Australia’s central bank cut its benchmark interest rate by one percentage point, the most since a recession in 1992, triggering a rebound in Asian stocks on speculation other countries will follow to unlock credit markets.
“Rumors are now circulating that today’s aggressive move by the Reserve Bank of Australia is the precursor for coordinated rate cuts by global central banks,” said Katie Dean, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne.
Today’s reduction, twice as much as economists forecast, took the overnight cash rate target to 6 percent, the lowest since November 2006. Banks around the world have been hoarding cash, driving up lending rates, even as central banks including Australia’s pump money into the financial system.
Reserve Bank Governor Glenn Stevens said in Sydney today that “an unusually large movement in the cash rate was appropriate in order to bring about a significant reduction in costs to borrowers.”
