Australia central bank cuts interest rate to 3.0%

Australia's central bank on Tuesday cut the official interest rate by 25 basis points to 3.0 percent, its lowest level since the depths of the financial crisis in 2009. Reserve Bank of Australia governor Glenn Stevens said ongoing troubles in Europe and the United States were overshadowing global growth prospects, with risks seen to the downside and local spending "relatively subdued" as a result. "The board judged at today's meeting that a further easing in the stance of monetary policy was appropriate now," said Stevens following the bank's monthly rates meeting. "This will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time." The cut brings rates to their lowest point since September 2009, the bottom of a savage 425-basis-point series of reductions over seven months to cope with the global downturn. The Australian dollar jumped to US$1.0444 from the $1.0421 it sat at before the decision. Stevens said Chinese growth looked to have stabilised but Asia was lagging as a result of its slowdown, with prices for Australia's key commodities "significantly lower", reducing the value of its exports by about 15 percent. Recent data had confirmed that the "peak in investment is approaching" for the key mining sector and consumer spending was unlikely to return to the boom times seen some years ago, added Stevens. "Available information suggests that the near-term outlook for non-residential building investment, and investment generally outside the resources sector, remains relatively subdued," he said. The labour market was softening and unemployment was "edging higher", he added, noting that the Australian dollar still remains "higher than might have been expected" in the circumstances and was squeezing some industries.