Official rates cut to historic low

The sun shone brightly on borrowers and homebuyers this week, when the Reserve Bank reduced the Official Cash Rate (OCR) by 25 basis points at its August meeting on Tuesday, bringing it to a remarkable 2.5 per cent.

The decision was no great surprise to analysts, however, with the ABC reporting earlier that day that it had been predicted by ‘all but one of the 27 economists surveyed by Bloomberg’.

The OCR has not been as low as 2.5 per cent since the 1960s, but Reserve Bank Governor Glenn Stevens indicated that there is still room to move ‘as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time’.