There has been mixed reactions to the Reserve Bank of Australia's widely expected rate cut with most welcoming the news but others critical that it doesn't go far enough.
There has been mixed reactions to the Reserve Bank of Australia's widely expected rate cut with most welcoming the news but others critical that it doesn't go far enough.
The central bank today said it would lower the cash rate by 25 basis points to seven percent, the first cut since December 2001, following its monthly board meeting.
The move is good news for mortgage holders with the four major banks announcing shortly after the RBA statement that they will pass on rate cuts to customers as pledged last month.
Assuming a new standard variable mortgage rate of 9.35 per cent, home owners with a $400,000 mortgage will save about $60 a month, according to CommSec.
Real Estate Institute of Western Australia president Rob Druitt welcomed the interest rate cut but called on the RBA to go a step further and reduce rates by a further 25 to 50 basis points.
"In WA we need some real stimulus in the secondary housing sector to get it moving again. First home buyers may be active but we need to encourage other buyers, those upgrading, to have another look at the market now that conditions are improving," Mr Druitt said.
"Sales volumes in the south west part of WA are down by 30 per cent on this time last year, even though we know there are lots of buyers waiting for the right signals to enter the market. Today's rate cut is hopefully one of those signals."
REIWA's calls were echoed by the Housing Industry Association, with chief economist Harley Dale also calling on the central bank to reduce rates further.
Retail industry body, Australian Retailers Association said the cut is too late for many struggling retailers, with the RBA's decision unlikely to be felt for at least three months as the damage had been done.
"The current retail cycle is at its lowest and we hope that today's rate cut will help start the upwards trend for consumer spending after successive months of stagnant and declining growth," ARA executive director Richard Evans said.
"It may take up 18 months for the damage caused by rate rises to be reversed and the economy to recover to growth levels similar to late 2007.
"Let's hope the RBA has seen the damage and decides to give the economy more relief and cut the cash rate again in October."
Meanwhile Treasurer Wayne Swan welcomed the rate cut decision but said more work needed to be done.
"This is certainly a decision that working families deserve," Mr Swan told parliament.
"They are still doing it tough ... but a bit of relief is certainly welcome."
However, he said the government still needed to put further downward pressure on inflation and interest rates.
"There is still so much more to do to take pressure off inflation ... and interest rates," he said.
