RBA cut rates to get the non-mining sectors moving

The Reserve Bank’s decision to cut rates earlier this month was put in place to try and get the non-mining sectors moving as it has not been performing well at all. Minutes from the Reserve Bank’s December meeting reveal that the central bank’s board is making an effort launch the housing construction and retail sectors from their slumber. 

The official cash rate was slashed by a quarter of a percent ¾% or 25 basis points to three per cent 3% and this is the second time in history it has reached this point. China’s economy has stabilised and the USA economy is growing at a reasonable rate, the board members were told, the members were also told that inflation is set to remain low and contained. 

It was said that “In the minutes of the RBA meeting” Labour costs and the softening labour market conditions suggested the inflation outlook still afforded the board some scope to provide additional support to demand," the minutes say. 

Economists have tipped further rate cuts throughout 2013, with the ANZ going as far as tipping reductions of up to one per cent by the end of 2013 bring the cash rate to 2%. The next meeting of the board will take place in February and it will be interesting to see what decisions will be made then.