Official cash rate now lowest in more than 50 years

The Reserve Bank of Australia has cut the official cash rate by 0.25 per cent citing slowing economic growth, declining commodity prices and the weakening Australian dollar.

The decision to reduce rates to a record low 2.5 per cent on the cusp of an election follows weakening business confidence, rising unemployment and fresh concerns over China’s economic outlook.

The Australian Bureau of Statistics revealed retail spending stalled in June after soft results in the previous two months. The latest ABS Retail Trade figures show Australian retail turnover was relatively unchanged (0.0 per cent) in June, seasonally adjusted, following a rise of 0.2 per cent in May.

In the ACT, house prices are retracting due to an oversupply of new units and many potential new homeowners are waiting to see which way the September 7 poll falls first.

The Housing Industry Association has urged both sides of politics to focus their election policies on housing to promote a housing-led recovery in the Australian economy.

“Residential building is one of the few sectors in a position to generate substantial economic activity in the wake of the mining boom,” said HIA Managing Director Shane Goodwin.

“Australia is currently building around 25,000 homes per year less than a decade ago, which is not only putting the brakes on job creation in the sector, but placing upward pressure on housing prices.”

A borrower with a $300,000 home loan will save $46 a month if the banks pass on the full amount.

To view the RBA’s full statement visit http://www.rba.gov.au/media-releases/2013/mr-13-15.html