Media Release

Budget in chaos - Worried RBA cuts rates to new emergency lows

The Coalition welcomes today’s 25 basis point cut in the cash rate to 2.75% by the Reserve Bank of Australia.

However today’s rate cut is by no means an endorsement of the Government’s economic management.

The Government’s Budget is in chaos, the Reserve Bank is now in unchartered territory and yet Wayne Swan says Australia is doing well.

The Reserve Bank notes that economic growth has been below trend and that the rate of unemployment has increased.

The RBA has decided it needs to cut rates to new emergency lows to encourage sustainable growth in the economy.

Three and a half years ago when the cash rate was 3% Wayne Swan described it as being at ‘emergency levels’.

“Interest rates in this community are at emergency levels.”
(Source: Wayne Swan, Hansard, 14 September 2009)

The cash rate is now 25 basis points below these “emergency levels”.

Wayne Swan in his Budget next week must show a clear and sustainable path back to surplus to restore confidence amongst business and consumers.