Australia Cuts Rate by Most Since 1992; Stocks Rise (Speculation of Global Rate Cut)

[Roland99]

Source: Bloomberg

Oct. 7 (Bloomberg) -- Australia's central bank cut its benchmark interest rate by one percentage point, the most since a recession in 1992, triggering a rebound in Asian stocks on speculation other countries will follow to unlock credit markets.

``Rumors are now circulating that today's aggressive move by the Reserve Bank of Australia is the precursor for coordinated rate cuts by global central banks,'' said Katie Dean, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne.

...

``It's obvious there's a need for synchronized global rate cuts,'' said Rory Robertson, an economist at Macquarie Group Ltd. in Sydney. ``You've got the most savage tightening in financial markets in anyone's living memory and all the big central banks have sat on their hands.''

Robertson said the Bank of England is ``long overdue'' to slash borrowing costs by up to 1 percentage point, followed by the U.S. Federal Reserve and the European Central Bank.

Read more: http://www.bloomberg.com/apps/news?pid=20601080&sid=asKWj7OOpq1M&refer=asia

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The article also notes the Fed's "stealth" rate cut yesterday.

[Violet_Crumble]

1. I'm surprised two of the big banks passed most of the rate cut on to borrowers...

After the rate cut was announced, straight away word was out that the commercial banks weren't going to pass the cut on to borrowers, but use it to protect themselves from the financial crisis. It's good to see two of them have passed on most of it to people with mortgages coz people have been suffering with all the rate rises that were happening over the past few years...