On Tuesday, 1 October 2019, it was announced by the Reserve Bank of Australia (RBA) that the official interest rate will drop by a further quarter percentage point to 0.75 percent. This is the third interest rate cut since June of this year, which has resulted in a 50 percent drop from 1.5 percent to the new rate of 0.75 percent.
Along with recent tax cuts, spending on infrastructure and a brighter outlook on the resources sector, the low level of interest rates are aimed at supporting growth in our economy.
These recent tax cuts have not achieved the expected increase in consumer spending and the decrease in unemployment. Unemployment rates slightly increased in August 2019 to 5.3 percent.
According to Reserve Bank governor, Dr. Philip Lowe, “an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target”.
The RBA board will continue to monitor developments and will determine if interest rates are required to be cut further in support of sustainable growth in the economy, full employment and meeting inflation targets.
