The Reserve Bank has cut official interest rates in response to a worsening outlook for the economy.
The RBA cut the cash rate by 0.25 percentage points to 3.25 per cent in a move that will be welcomed by borrowers.
A 25 basis point cut, if passed along in full by lenders, would reduce the average monthly repayment on a $300,000, 25-year mortgage by about $48.
The decision was considered a line-ball call, with markets tipping a more than 60 per cent chance of a cut, while most economists had predicted the Reserve would stay on hold.
Today's move marks the third cut this year and brings the total official reductions to 150 basis points since November, when the RBA first began its current rate cutting cycle.
The central bank was prompted to move after prices for the nation’s commodity exports fell in recent months and the outlook for growth in China, crucial for Australia’s economy, became less certain.
At the same time, the dollar has remained above parity with the US dollar, offering little relief to the non-mining parts of the economy, which rely on a weaker currency to stay globally competitive.
