The Reserve Bank has delivered an early Christmas gift to borrowers and retailers by cutting its key interest rate for the second month in a row.
The central bank cut its cash rate 25 basis points to 4.25 per cent, marking the first back-to-back monthly cuts since April 2009.
If passed along in full by the banks, today’s cut will save the average mortgage holder – with a $300,000, 25-year mortgage – about $47 a month. Retailers had been calling for a rate reduction to help bolster tepid sales heading in the final few weeks of 2011.
Economists had been split almost evenly between those forecasting a rate cut or a rate pause. Financial markets, though, had tipped the central bank would again cut rates as the global economic outlook dims.
The Reserve Bank board is not due to meet again to set interest rates until February 7 next year.