RBA Cheers borrowers with rate cut

The Reserve Bank has cut official interest rates to their lowest in three years in response to a worsening outlook for the global economy and signs of a weakening local labour market.

The RBA cut the cash rate by 0.25 percentage points to 3.25 per cent in a move that will be welcomed by borrowers.

“The door remains open for further cuts.”

A 25 basis point cut, if passed along in full by lenders, would reduce the average monthly repayment on a $300,000, 25-year mortgage by about $48.

Treasurer Wayne Swan welcomed the RBA’s decision, saying “Australians deserve cost of living relief and today that’s what they got”.

The Bank of Queensland was the first bank to react, cutting its standard variable rate by 20 basis points to 6.71 per cent immediately after the RBA’s announcement.

“Given the continuing pressure on the cost of funding a 20 basis points reduction is the best balance between our customers and shareholders,” chief executive Stuart Grimshaw said.

The dollar fell to the day’s low of $US1.0304, from $US1.0368 immediately before the decision.

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