CANBERRA: The Reserve Bank of Australia has cut interest rates to a fresh record low of 1.5 per cent to try and stimulate an economy that is suffering its slowest rate of price growth in 17 years. In its decision on Tuesday, the central bank said slower growth in mortgage lending and house prices as well as an increasing supply of apartments provided it with scope to combat “quite low” inflation.
“The likelihood of lower rates exacerbating risks in the housing market has diminished,” said Glenn Stevens, RBA governor. The 25 basis points cut in interest rates, which was predicted by four out of five economists, prompted a sell-off in the Australian dollar, which dropped as much as 0.6 per cent to below 75 cents to the greenback following the decision. But it had recovered to be 0.2 per cent higher at $0.7548 in early European trading.