Reserve Bank Governor Graeme Wheeler today reduced the Official Cash Rate by 25bps to 2.00 percent.
With the dollar jumping (rather than falling) after the announcement, it is clear the market expected a surprise 50bp drop.
He cited his main reasons as:
- Global growth is below trend.
- Long-term interest rates are at record lows.
- The high exchange rate is adding further pressure to the export and import-competing sectors.
- A decline in the exchange rate is needed.
On the near future: