RBA cuts cash by 25 basis points to 3.0 per cent

Submitted 7/04/2009

AAP

The Reserve Bank of Australia has cut the official cash rate by 25 basis points to 3.0 per cent, the lowest level in 49 years.

The reduction, if passed on in full by retail banks to their customers, would reduce the monthly repayment on an average $300,000 standard variable mortgage by $45.

The RBA has now cut the cash rate by 425 basis points since September as it tries to cushion the economy from the worst global recession since World War II.

Economists had been split as to whether the central bank would leave the cash rate unchanged for a second month in a row, or cut it by up to 50 basis points given the spate of generally weak economic data.

RBA governor Glenn Stevens said market and mortgage rates are at very low levels by historical standards and business loan rates are below recent averages, reducing debt-servicing burdens considerably.

"Nonetheless, the board judged that there was scope for a further modest adjustment to the cash rate," Mr Stevens said in a statement.

"The stance of monetary policy, together with the substantial fiscal initiatives, will provide significant support to domestic demand over the period ahead."