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RBA cuts interest rate to record low

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The Reserve Bank has cut its key interest rate to a fresh record low of 1.50 per cent.

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RBA governor Glenn Stevens said very subdued growth in labour costs domestically and very low cost pressures globally meant inflation was expected to remain quite low for some time.

“The board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting,” Stevens said in a statement today.

Repayments on a $300,000 mortgage will drop by around $45 a month on average if retail banks fully pass on the 25-basis-point cut in the cash rate by the Reserve Bank.

Here’s what you will save if banks follows the RBA, if your mortgage is (size, new monthly repayments, reduction):

This assumes 25-year standard variable rate loan at an average new interest rate of 5.15 per cent.

 -AAP

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