The Reserve Bank of Australia (RBA) has cut the official interest rate by a quarter-percentage point to a record low 0.75 per cent.
Reserve Bank governor Philip Lowe said in a statement that the easing was made to help lift employment and has not ruled out even further rate cuts.
“It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target,” Dr Lowe said.
“The board took the decision to lower interest rates further today to support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target.”
What does it mean for property prices?
Fueled by the mid-year rate cuts, Sydney and Melbourne property prices jumped 1.7 per cent in September, following similar gains in August, according to the latest CoreLogic data.
After almost two years of price dives – totalling a 15 per cent drop in Sydney and 11 per cent in Melbourne – prices in those cities have now rebounded about 3.5 per cent in the last quarter.
Prices still have a way to go to regain their peaks, but the RBA’s rate cut today adds “fuel to the fire”, according to Commonwealth Bank economist Gareth Aird.