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Nation celebrates interest rate victory
Released 1 November 2011

The Reserve Bank of Australia has cut interest rates 25 basis points to 4.50 per cent, the first rate move this year.    

The rate cut was highly anticipated after Consumer Price Index (CPI) figures last week indicated inflation was under control.

REINSW Chief Executive Officer Tim McKibbin welcomed the decision by the RBA as a positive strategy.

"The economy is now in need of stimulus," he said. "The provision of a small reduction now with the potential for additional cuts going forward will avert the need for sharp decreases in official interest rates in the future. It is far better to have a measured and proactive maintenance approach than to take dramatic reactive decision which may have had an unsettling effect on the market.

"We had seven increases to November 2010 to address the RBA's concerns about inflation. This decision to cut rates comes at a time of increasing unemployment and a housing market, which is in difficulty."

McKibbin called on the banks to pass on the rate cut quickly and in full.

"I think as responsible corporate citizens and playing their part in the economy they have a duty to pass on the savings.

"For those who have existing mortgages they will have more disposable income in the lead up to Christmas which would put an injection into the retail sector."