RBA shocks with 50bp cut

by Adam Smith01 May 2012

The RBA has bettered expectations today in choosing to cut the official cash rate by 50bps.

The bank made the cut in response to benign inflation figures, weakening terms of trade and poor credit demand. A move was widely expected, with Westpac chief economist Bill Evans this week calling a cut "beyond doubt".

Nevertheless, the bank has bettered expectations. While the housing industry and retailers had called for a 50bp cut, Evans said such a move was unlikely.

"We would tend to dismiss that prospect given the general cautious approach of the RBA," he said on Monday.


  • by Louise Jealous-Bennett 1/05/2012 2:37:57 PM

    Let's hope the banks pass it on.

  • by David Gawthrop 1/05/2012 2:40:38 PM

    Is this really a shock? It was widely predicted by a lot of economists in the last couple of days, weeks even, that for the RBA to have the necessary effect it would have to drop rates 50 points in the hopes that the bank's would pass on some rate cut.

    It's good news, but not a shock.

  • by John C 1/05/2012 2:46:54 PM

    Still not enough to stimulate the poorer and major part of the economy