Australia to Halve Interest Rates, Says Former RBA Chief

Former Australian central bank Governor Bernie Fraser stated that the board may cut the overnight cash rate to less than 2.0%. Fraser, who headed the Reserve Bank of Australia through the nation’s 1991 recession, stated that “this recession will be deeper and longer than the last recession in 1991” in a Bloomberg interview earlier in the day. Monetary policy may need additional support from the government if the nation expects to recover. Indeed “a further stimulus from the government will be required,” the former governor said.

Economists forecast a 50bp rate cut at the bank’s Feb 2^nd meeting. Such a move would add to current Governor Glenn Stevens’ aggressive policy that has seen the overnight rate slashed by 300bp since early September. Indeed, if the RBA cuts on Feb. 2^nd, it will be the lowest rate that the nation has faced in the central bank’s history.


AUDUSD traded through 0.6536 at 22:32 EST.

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