The Reserve Bank has cut the cash rate by a quarter of a percentage point to a new record low of two per cent, saying that falling commodity prices, weak business investment and subdued government spending are dragging on the economy.
RBA governor Glenn Stevens says although the Australian dollar has dropped noticeably against the US dollar it will have to fall further because of the large declines in commodity prices.
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There are no indications in the RBA's short statement that it is looking to cut the cash rate further.
The RBA cut rates to 2.25 per cent in February.
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What you'll save if banks follow the RBA
Repayments on a $300,000 mortgage will drop by $45 a month on average if retail banks fully pass on Tuesday's 25-basis-point cut in the cash rate by the Reserve Bank.
If your mortgage is (size, new monthly repayments, reduction):
* $100,000 - $608.13 - $14.95
* $150,000 - $912.19 - $22.42
* $200,000 - $1216.26 - $29.90
* $250,000 - $1520.32 - $37.37
* $300,000 - $1824.39 - $44.84
* $350,000 - $2128.45 - $52.32
* $400,000 - $2432.52 - $59.79
* $450,000 - $2736.58 - $67.26
* $500,000 - $3040.65 - $74.74
This assumes 25-year standard variable rate loan at an average new interest rate of 5.4 per cent.
(Source: CommSec)
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