The Reserve Bank of Australia (RBA) has made the historic decision to lower the Official Cash Rate (OCR) by 25 basis points to 2.25 per cent.
It has been 18 months since the RBA Board last changed the OCR. The big announcement came on February 3, with Governor Glenn Stevens saying that the decision comes as a result of below-trend growth in Australia.
While the global economy has shown strong signs of improvement of the past few months, domestic results have been a little less promising.
Last month, the Australian Bureau of Statistics (ABS) reported that the Consumer Price Index (CPI) had increased by just 1.7 per cent in 2014. This was below the RBA's 2 to 3 per cent target zone, and offered some indication that a change in the financial environment was required.
"Overall, the Bank's assessment is that output growth will probably remain a little below trend for somewhat longer, and the rate of unemployment peak a little higher, than earlier expected. The economy is likely to be operating with a degree of spare capacity for some time yet," said Mr Stevens.
"At today's meeting, taking into account the flow of recent information and updated forecasts, the Board judged that, on balance, a further reduction in the cash rate was appropriate."
The result was predicted by some within the industry, including the Real Estate Institute of Australia (REIA), which recently called for a cut to the cash rate in the wake of below average approvals for new owner-occupied housing commitments in January.
This news will have big implications for the real estate industry, as a cut to the OCR will likely lead to bank's across Australia cutting lending rates. As a result, anybody looking to enter the residential property market or purchase an additional piece of real estate may have success securing a good home loan.
For more information on finding the right property for your needs, get in touch with a local real estate agent today.