RBA worried about recession

The Reserve Bank is expected to cut interest rates again in December, by a further 0.5 per cent amid concerns that weak economic data is signalling a looming recession in Australia. Official rates have been reduced by 2 per cent since September, bringing the average standard variable mortgage rate down from 9.6 per cent to about 7.6 per cent now, if the latest 0.75 rate cut is fully passed on to borrowers. Those cuts will save borrowers with an average mortgage of about $300,000 about $400 per month. A further cut expected in December would bring the total saving to $500. Economists from JP Morgan, Citibank, UBS and TD Securities all expect a further cut of 0.50 points by the RBA on the 2nd of December. Economists said the RBA was clearly very worried about the possibility of Australia falling into recession. The statement from the RBA yesterday said the bank would “continue to monitor developments and make adjustments as needed to promote sustainable growth”.

Source: The Age