Reserve Bank slashes cash rate to 3%
Residential property owners received a financial boost yesterday after the Reserve Bank slashed interest rates to a record low.
At its meeting yesterday (December 4), the RBA cut the cash rate by 25 basis points to three per cent – the lowest level since 2009.
In a statement, the central bank's governor Glenn Stevens said the decision was based on a below average global forecast which includes uncertainty in Europe and slowed growth in China.
"Risks to the outlook are still seen to be on the downside, largely as a result of the situation in Europe, though the uncertainty over the course of US fiscal policy is also weighing on sentiment at present," the expert explained.
The governor went to on to say non-residential building investment in Australia is restrained, a trend that will hopefully change amid lower interest rates.
"This will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time," Mr Stevens added.
While expenditure has been strong in the resource sector, other industries haven't performed as strongly over the past year.
Furthermore, private spending is tipped to grow, however, it is unlikely this will be comparable to levels of previous years.