Australia's central bank slashed interest rates by one percentage point to a 45-year low Tuesday in the latest in a series of aggressive cuts sparked by the global financial crisis.
The move by the Reserve Bank of Australia (RBA) at its monthly board meeting took the official cash rate to 3.25 per cent.
It was the fifth consecutive cut by the RBA, which has sliced a total of 400 basis points off the official rate since September as inflation fears gave way to concern about the impact of slower world economic growth.
The move came shortly after the government announced a 42 billion Australian dollar (26 billion US dollar) stimulus package and cut its estimate of economic growth this year by half.
Gross domestic product growth is now expected to be 1.0 per cent in 2008/09 and 0.75 per cent the following year, compared with respective forecasts of 2.0 per cent and 2.25 per cent made just three months ago.
RBA governor Glenn Stevens said the board had taken the stimulus package into account in making its decision.
"The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad," he said.
Stevens said the severe global economic downturn and substantial falls in commodity prices had led to a significant dampening of confidence in Australia.
"In these circumstances, the board judged that a further sizeable reduction in the cash rate was appropriate, to give further support to demand," he said in a statement.
The move by the Reserve Bank of Australia (RBA) at its monthly board meeting took the official cash rate to 3.25 per cent.
It was the fifth consecutive cut by the RBA, which has sliced a total of 400 basis points off the official rate since September as inflation fears gave way to concern about the impact of slower world economic growth.
The move came shortly after the government announced a 42 billion Australian dollar (26 billion US dollar) stimulus package and cut its estimate of economic growth this year by half.
Gross domestic product growth is now expected to be 1.0 per cent in 2008/09 and 0.75 per cent the following year, compared with respective forecasts of 2.0 per cent and 2.25 per cent made just three months ago.
RBA governor Glenn Stevens said the board had taken the stimulus package into account in making its decision.
"The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad," he said.
Stevens said the severe global economic downturn and substantial falls in commodity prices had led to a significant dampening of confidence in Australia.
"In these circumstances, the board judged that a further sizeable reduction in the cash rate was appropriate, to give further support to demand," he said in a statement.
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