mortgage-rates-plunge-to-gfc-levels. There is growing concerns Australia’s miracle economy might not be in as good shape as our politicians would lead us to believe. This view was reinforced today when the Reserve Bank of Australia was forced to cut official interest rates to help stave off what could emerge as the second stage of the GFC. Treasurer Wayne Swan said today, “these cuts have been made responsible by our responsible budget policy. Today, at 3.25 per cent, the official cash rate is lower than it was at any time under the last Liberal government.”
The central bank slashed another 25 basis points from the cash rate today, adjusting the leaver down one notch to 3.25 per cent. It is just 25 basis points off the low recorded during the Global Financial Crisis (stage I).
The statement on today’s monetary policy decision shows the central bank is concerned about the outlook of the world economy, especially growth in China. It notes commodity prices remain significantly lower.
Back home, it notes “investment in dwellings has remained subdued” and makes an assessment that the labour market has “softened somewhat” in recent months.
Last Friday the RBA released its August update of its financial aggregates painting another bleak picture for housing. Growth in housing finance continues to fall and sits at “subdued” levels not seen since records started 35 years ago. Hardly the foundation required for a recovery.
