Interest Rate Update – May 2015

The Reserve Bank of Australia (RBA) has announced it will reduce the official cash rate by 0.25% to 2.00%, the lowest in recorded history.

Following last month’s RBA decision to leave the cash rate on hold with a very “dovish” tone in their issued minutes the RBA has now decided to reduce the cash rate by 0.25% to endeavour to stimulate the economy further, likely coupled with budget measures next Tuesday. Economic indicators remain mixed with a sub-par growth economy, business outlook remaining soft, inflation under control and the Australian dollar remaining too high. On a positive note quarterly inflation (2.3% YTD) remains under control within the RBA band of 2–3%. Building approvals were also up 18% over the 12 months to March 2015.

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