1% Interest Rate Cut for OZ

[Don and Liz]

Those of you investing in OZ may be interested to know that our rates here have just dropped a full 1%.

The currency and share markets have welcomed the decision with strong support for the dollar as well as a strong rise on the ASX.


Banks say that .75% should be passed on to mums and dad's and of course all the PI investors finding property again after pulling money from the share market.

Have a great day.

[[email protected]]

God Bless Australia!!

[67910241]

with strong support for the dollar

WHAT?

The AUD is now 72c US - down from 98c a few months ago!

That currency is getting obliterated. Falling faster than the commodity prices!

[Don and Liz]

98 cents is ancient history.

It is significant because the cash rate dropped twice what the market expected yet the currency went up (after short fall) Very Significant confidence in the OZ economy.

[67910241]

98 cents is ancient history.

It is significant because the cash rate dropped twice what the market expected yet the currency went up (after short fall) Very Significant confidence in the OZ economy.

Or perhaps everyone expected a big OCR drop days ago, and then merely got it.

This graph (showing aussie at over 95c less than 3 months ago) shows how strong the Aussiedollar seems to be...

[Don and Liz]

The answer to that is a very long post!

Watched the announcement, saw the sell off and then saw it come back along with the market. I stand by the comment that july is ancient history in a forex market.

[67910241]

So

As a result, Aussie may have a prolonged slow motion descent back to the fundamentals instead of a sharp, radical and swift correction?

[Don and Liz]

There is such a thing as good news!!! The rest of that statement is a short novel so I will leave it at that. Just thought people might want to know some good news.

[tpr2]

Thats good news for me.

Happy Happy joy joy..... now for Nz to do the same.

[muppet]

Reserve Bank rate cut to protect Australian economy

Scott Murdoch | October 07, 2008

THE Reserve Bank cut interest rates by 100 basis points today, in a bid to shield the Australian economy from the global wreckage.
The bigger-than-expected reduction in official rates to 6 per cent was the largest cut in rates by the Reserve Bank since May 1992.

Westpac was the first major bank to announce a cut in its standard variable rate, following the RBA’s interest rate decision. The bank revealed it would lower its lending rates by 0.8 per cent as of next Monday.

The cut will take Westpac’s standard rate to 8.56 per cent. The bank’s business lending rates will also be slashed by 0.8 per cent.

The three other major banks also cut their standard variable rates by 80 basis points, keeping the 20 basis points to cover an increase in their own funding costs.

The Commonwealth Bank has the cheapest rates of the big four at 8.53 per cent, NAB and Westpac are offering 8.56 per cent and the ANZ 8.57 per cent.

Westpac’s group executive of retail and business banking Peter Hanlon said that about half of its funding needs were sourced through deposits.

Mr Hanlon said: “Despite the continuing global financial crisis and the increased cost of funding we are experiencing, Westpac has been able to pass on a significant portion of the RBA’s reduction to the official cash rate.

“Westpac will continue to monitor the external environment and our cost of funding position and will look to pass on further interest rate reductions where possible.

“Since the beginning of September this year, term funding costs have increased to the
highest levels seen since this crisis began over 12 months ago.”

The Australian stock market rallied into positive territory after the RBA’s shock move; the local bourse had been battered earlier by a rout in northern hemisphere bourses overnight.

Reserve Bank governor Glenn Stevens said conditions in international financial markets took a “significant turn for the worse” last month.

“Economic activity in the major countries is also weakening, and evidence is accumulating of a significant moderation in growth in Australia’s trading partners in Asia,” Mr Stevens said in a statement.

He said the Reserve Bank’s board judged that there had been a “material change to the balance of risks surrounding the outlook” that required a “significantly less” restrictive position on monetary policy.

“The board also took careful note of movements in funding costs in wholesale markets,” Mr Stevens said.

“Having weighed these considerations, the board decided that, on this occasion, an unusually large movement in the cash rate was appropriate in order to bring about a significant reduction in costs to borrowers.”

http://www.theaustralian.news.com.au...-20142,00.html

[donna]

Yep great news and good to hear NZ will follow suit within 48 hours (says DomPost this morning).

I wonder if the rate reduction will filter through to mortgages in Oz?

Cheers,

Donna

[Don and Liz]

Donna, the major banks put through .8 per cent and aussie home loans are doing .75.

[tpr2]

So what happens next?
Is that enough to lull the wary investor out of their burrows?

[Don and Liz]

Not the herd quite yet but they are usually a fair bit behind the times.

[67910241]

Hey Don

U.S. Dollar Bid Ask

AUDUSD=X 1 Oct 9 0.6847 0.6847

She's still sliding...