2nd November 2011: RBA Lowers Official Cash Rate

The Reserve Bank Board has decided to lower the cash rate by 25 basis points to 4.5 percent, effective 2 November 2011.

Recent information is consistent with a moderation in the pace of global growth, though fears of a major downturn have not been borne out so far.

The pace of US economic expansion picked up in the September quarter, but is still only moderate and leaves considerable spare capacity. China's growth has slowed, as policymakers there had intended. Output in Asia has now recovered from the effects of the Japanese earthquake, and domestic demand in the region is generally expanding.

Trade performance, however, is starting to see some effects of a significant slowing in economic activity in Europe, where the prospects are for economic weakness to continue. Commodity prices, while still at high levels, have generally declined over recent months.

For further analysis, read Farley Financial's 'Interest Rate Bulletin' for November 2011.