Minutes of the RBA’s November monetary policy meeting show the Reserve Bank is willing to take last minute developments into account with its decisions on setting the official cash rate.
Governor Glenn Stevens said that market volatility influenced the eleventh hour proposal of a 75 basis point reduction rather than a previously recommended 50.
The larger recommendation was influenced by continuing poor conditions in financial markets, a significant deterioration in growth prospects for the global economy and increased likelihood that domestic inflation would fall in the year ahead.
The 75 basis point cut would “enable a further meaningful reduction in rates paid by borrowers and could assist confidence among consumers and businesses,” the board judged.
A further reduction from the RBA of 50 to 75 basis points is widely tipped for December.
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