Reserve Bank Drops Interest Rate

At its meeting today, the Board decided to lower the cash rate to 4.25 per cent, effective 7 December 2011.

The reduction in the cash rate as a result of the Board's previous decision flowed through to lending rates, which are now around their average level of the past 15 years. Short-term market interest rates have tended to decline a little further in recent weeks, though term funding conditions for financial institutions have become more difficult. Credit growth remains subdued and asset prices have declined further over recent months. The exchange rate has been quite variable over the past few months, but remains at an historically high level.

Overall, the Board concluded, on the basis of all the available information, that the inflation outlook afforded scope for a modest reduction in the cash rate. The Board will continue to set policy as needed to foster sustainable growth and low inflation over time.

Please contact Dave Lamari if you would like him to answer any questions you may have for him. Ph 47236000.

From the RBA Media Release Statement.