"RBA cuts cash rate to record low"

"BORROWERS got their first piece of good news from the central bank this year - reducing the cash rate to a record low of 2.75 per cent.
In 2012 the Reserve Bank of Australia cut the cash rate four times but the May board meeting ordered the first reduction for 2013.
In a statement, RBA governor Glenn Stevens said low inflation allowed the board to make a further reduction to boost economic growth.
March quarter inflation was 2.5 per cent, right in the middle of the RBA's target band of two to three per cent.
"At today's meeting the Board decided to use some of that scope," Mr Stevens said.
"It judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target."
UBS interest rate strategist Matthew Johnson said he thinks there won't be any more rates reductions for a while and this one was a line-ball decision.
"My read of the statement is they cut because inflation was low and because they could, not necessarily because they changed their outlook.
"I think that means they are not going to cut in the near term, they are pretty data dependent."
CommSec chief economist Craig James said nothing much has changed economically since the April meeting where the board kept the cash rate unchanged.
"The Reserve Bank has adopted the global central bank mantra of doing whatever it takes to get the economy growing at a faster rate," he said.
"There are risks in cutting rates to generational lows but the Reserve Bank believes it is a risk worth taking.
"The Reserve Bank has flagged further rate cuts, saying it has used only some of its scope to ease rates further."
HSBC chief economist Paul Bloxham said low inflation won the day.
"They have noted in the past that the link between the Aussie dollar and interest rates is pretty loose, so it's hard to know."
In its statement, the RBA said inflation is consistent with the target and a little lower than expected.
It also said the exchange rate had been at a historically high level over the past 18 months, which was unusual given the decline in export prices and interest rates during that time.
If today's interest cut was passed on in full then the repayments on a $300,000 mortgage would drop by about $46 a month on average."

This article was sourced from News.com.au and was written by Jason Cadden and Kim Christian.