The Australian central bank on Tuesday cut rates to a record low of 2.25 percent per annum, breaking an 18-month break in the implementation of incentives. The Australian dollar fell more than a US cent after the Reserve Bank of Australia (RBA) has completed the first meeting in the new year.
"In general, the economic growth is likely to remain slightly below the trend a little longer, and the peak in the unemployment rate will be slightly higher than previously expected, - said the manager of the Central Bank Governor Glenn Stevens. - This measure is necessary to provide additional support to the demand, thus contributing to sustainable growth and inflation outcomes, appropriate for the purpose". Markets are inclined to think about rate cuts this week, but only 9 of the 29 analysts polled by Reuters had predicted such a decision.
Australian dollar declines
The Australian dollar has fallen against all the major currencies after the Reserve Bank of Australia lowered the discount rate to 2.25%. Economists expected that the Central Bank will leave rates unchanged and will not drop them before March. After the RBA rates cut, Australian dollar plummeted to a new low of 5.5 years. About eight weeks ago, when the rate of the Australian dollar was trading at 82 US cents, the head of the Reserve Bank said that he would like to see the pair AUD / USD at around 75 cents. The Australian dollar has fallen markedly in value against the US currency in recent months, although its decline was significantly less than in relation to a currency basket.
Thus, the RBA joined other central banks of the world, which soften monetary policy and lower rates. Countries that reduce interest rates, or use other incentives think that they would support economic growth and employment due to the weakening of national currencies, stated TeleTrade analysts (rated among the TOP Forex Brokers Masterforex-V World Academy http://www.masterforex-v.com/).
