Interest Rate News

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The Reserve Bank has handed borrowers and the struggling non-mining sector some relief, shaving interest rates by 50 basis points in a surprise move.

At its May meeting the board of the central bank cut the cash rate to 3.75 per cent, its lowest level since December 2009.

Australia’s annual inflation rate has fallen sharply to 1.6 per cent, down from 3.1 per cent a year ago, and well below the Reserve bank’s target range of 2 to 3 per cent.

The RBA had indicated after its April board meeting that it could ease the cash rate this month if the inflation figures were weak.

Attention will now turn to whether the commercial banks will pass on some or all of the cut.

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