America’s central bank has cut US interest rates by half a percentage point. The move amps up the pressure on the Reserve Bank to cut rates in Australia.
The world’s most important central bank, the US Federal Reserve, has cut its key interest rate by half a percentage point, jolting financial and commodity markets while putting pressure on Australia’s Reserve Bank to bring forward its own plans for rate relief.
Powell said the larger-than-expected half percentage point rate cut gave the bank options as it dealt with changes in the economy.“We can go quicker if that’s appropriate, we can go slower if that’s appropriate, we can pause if that’s appropriate.”of a near-term rate cut in Australia. The Australian dollar jumped half a cent on the announcement, taking it above US68 cents. A stronger Australian dollar will help to push down the prices of imported goods, aiding in the RBA’s efforts to bring down inflation.
He said the bank’s “patience”, by not cutting earlier, had also ensured the risks around inflation were now that it may be a little too low rather than remain too high.
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