By FXEmpire.com
The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to 3.50 per cent, citing further weakening in Europe and some moderation in growth in China as contributing to its decision.
“Europe’s economic and financial prospects have again been clouded by weakening growth, heightened political uncertainty and concerns about fiscal sustainability and the strength of some banks,” the RBA said.
The cut was in line with market consensus of a 25 basis point reduction.
The RBA’s decision to drop interest rates at its June board meeting comes after it cut the cash rate by 50 basis points in May.
The AUD/USD is now trading at 0.9780 gaining adding 0.0050 since the announcement.
Policymakers at the RBA have eased policy with rate cuts of 100 bps, on three occasions since November 2011, with the most recent decision on May 1st having been the most aggressive with a 50 bp reduction.
This week we have interest rate meetings by the BoC, ECB, BoE and Chair Bernanke’s testimony on Thursday, accordingly the risks are weighted towards a shift in central bank tone; however a longer-term solution is likely to only come with a shift in European public policy, something maybe the ‘grand plan”
Also today, the G7 has called an emergency conference to discuss the European crisis, as contagion is affecting global economies, from China to the US and all the BRIC and Emerging Nations are seeing drops in GBP and manufacturing due to the ongoing situation.
Around the world, investors, speculators, businessman and bankers are once again looking toward the central banks to deal with the economic problems.
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Originally posted here
