Australia not an interest rate island: RBA signals more cuts | swrighteconomy
to a 12-month high of 5.3 per cent, prompting financial markets to lift the chance of a rate cut at the RBA's meeting next Tuesday to 76 per cent. A 0.25 percentage point cut in official rates, if passed on by commercial banks, would save a person with a $400,000, 30-year mortgage almost $47 a month.Dr Lowe said a growing issue was the way central banks around the world were lowering their interest rates, which in turn put upward pressure on the Australian dollar.
"We live in an interconnected world, which means that we cannot completely insulate ourselves from long-lasting shifts in global interest rates," he said. "Our floating exchange rate gives us a degree of monetary independence, but we can't ignore structural shifts in global interest rates. "If we did seek to ignore these shifts, our exchange rate would appreciate, which, in the current environment, would be unhelpful in terms of achieving both the inflation target and full employment."
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