The Reserve Bank has dropped its official cash rate below 1% for the first time as it battles rising unemployment and stimulate a slowing economy.
This is the RBA’s third cut since June and comes after data showed the unemployment rate has increased to 5.3%, from 4.9% at the start of the 2019.
The big banks passed on around 80% of the 50 basis points of cuts in June and July, but are expected to hold back more this time.
RBA governor Philip Lowe commented in a statement that more work was required in order to support the economy. “The Board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time,”
Earlier this year the RBA confirmed it was looking to drive the unemployment rate down to 4.5%, a level which it considers to be “full employment”.
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By Wendy Chamberlain
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