RBA cuts interest rates to 1.75%

The Reserve Bank of Australia has moved to head off fears about deflation, cutting its official cash rate by 25 basis points to a historic low of 1.75 per cent.

Key points:

  • Cut influenced by core inflation rate of 1.5pc — lowest reading on record

  • If cut fully passed on, it would mean a $43-a-month saving on a 25-year, $300,000 mortgage

  • “Potential risks of lower interest rates… are less than they were a year ago,” RBA governor says

It is the first change in interest rates since May last year, when rates were cut 25 basis points to 2 per cent.

The Australian dollar immediately tumbled 1 per cent to below 76 cents against the US dollar in response to the cut.