The Reserve Bank of Australia decided to make another 0.25% interest rate reduction in their April meeting to support the Australian economy weather the storm of the Global Financial Crisis.
Not since 1960 have rates been this low with the official rate now stands at 3%.
Australian Banks are reluctant to pass on the full reduction to their clients as they claim they are still having higher lending costs as a result of the Credit Crisis although this seems to have been largely resolved due to the billions of dollars that Governments world over have poured into Financial markets over the past year.
No doubt the Rudd Government will increase pressure on the banks to make sure they pass on some, if not all, of the recent reduction to the general market.
The rate cut is aimed at trying to encourage the local market to regain confidence and begin normal spending patterns in order to reactivate the Australian economy.
It follows the Australian Tax Bonus where some 7 million Australians will receive a Government rebate of up to A$900 during April and be encouraged to go out and spend it in an effort to improve retail figures and steer Australia away from a technical recession.
The Australian economy has fared better than most other countries due to the incoming migration spending, and domestic spending, although reduced, staying at levels that have sustained activity.
The Rudd Government continues to remain determined to spend their way out of recession and we now look forward to a Budget in May that will no doubt be full of incentive programs to further re-stimulate the Australian economy.
We will be running our Annual Australian Budget Review seminars around the world in May and June so look out for them in your city.
