The Reserve Bank of Australia (RBA) cut the cash rate by 25 basis points to 4.50% from 4.75% previously. The RBA said: "Over the past year, the Board has maintained a mildly restrictive stance of monetary policy, in view of its concerns about inflation. With overall growth moderate, inflation now likely to be close to target and confidence subdued outside the resources sector, the Board concluded that a more neutral stance of monetary policy would now be consistent with achieving sustainable growth and 2–3 per cent inflation over time."
The Bank previously held the cash rate unchanged at 4.75% during its previous meeting in October this year, the RBA last increased the interest rate by 25 basis points in November last year. Australia reported annual consumer price inflation of 3.5% in Q3 this year, compared to 3.6% in Q2, and up from 3.3% in Q1, and 2.7% in the December quarter of 2010, and just outside the Bank's inflation target of 2-3%.
The Australian economy expanded 1.2% in the June quarter, after contracting -0.9% during the March quarter due to the impact of natural disasters; placing year on year GDP growth at 1.1% in the June quarter, and 1.2% in the March quarter.
The RBA next meets on the 6th of December, and will release its October meeting minutes on the 18th of October. The Australian dollar (AUD) has gained about 5% against the US dollar so far this year, after reaching parity and climbing as high as 1.10 this year; the AUDUSD exchange rate last traded around 1.05