The time has come for some drastic measures from the RBA. Fortunately the Reserve Bank of Australia has slashed the cash rate by a full 1% (or 100 basis pts) to help stem the tide of the market slow down.
This is some very positive news and in line with this Westpac has announced it will pass on up to 80 basis points to its customers, given this lead from a major bank we should expect to see the other majors follow suit shortly.
The RBA has made a very positive move forward to help kickstart the economy as the inaction of the ruling government has seen prices of fuel, shopping and general living skyrocket as they have been unable to put a cap on inflation through diligent fiscal management.
The decrease in the interest rates has come at the right time for the retail sector as well, especially leading up to Christmas. By the time the decreased rates are passed on and the positive impact is felt by all who have a home loan it will be just about Christmas time.
What this means is that retailers should see some benefit by way of heightened activity as compared to the previous trading quarters which saw sales slump. With more money injected into the retail sector this could also mean the creation or sustaining of more retail sector jobs and this can only be a good thing.
I believe that there is still more fall out yet to come from the US Credit Crisis but in the same breath I also believe that the RBA have responded quickly enough to counteract future effects of the crisis. Hats off to the RBA for making such a big call and dropping the rates a full percentage point for the first time in 16 years, if you're old enough to remember this was during the 'recession we had to have'......
The credit rating blog is still on the cards and will be out shortly, I thought this was more important at this stage to highlight to the readers of this blog.
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