For the 12th time, starting in Nov 2011, the RBA Board have elected to cut the Cash Rate at their meeting today. The 25bps cut takes the Rate to a new low of 1.5%.
With inflation falling well below the Bank’s 2-3% target (see commentary from last week) and the Minutes of the July meeting leaving the door to a cut wide open, this was a widely expected move. The futures market had been pricing the cut at about a 75% chance this morning. The forex market was also subdued in its response. The A$ had been falling from an overnight high around 76 US cents this morning and it briefly fell less than a half of a cent against the US$ on the news; but recovered most of that very quickly and is currently trading at 75.24 cents having been at almost 75.5 cents just before the announcement.