RBA lowered the cash rate by
-25 bps, following a -50 bps cut in May, to 3.5% in June. Deterioration in the
sovereign debt crisis in the Eurozone and moderation in the Chinese economic
growth were reasons triggering the reduction. Moreover, cautiousness of
business and household spending which might continue in the near-term also
contributed to the need for further easing. After the rate cut, policymakers
believed that borrowing costs have dropped to be a 'little below their
medium-term averages'. More in RBA Eases For A Second Consecutive Month. Aussie GDP showed an impressive 1.3%
qoq growth in Q1, more than double of expectation of 0.5% qoq and was triple of
Q4's 0.4% qoq. Year-over-year rate also jumped to 4.3% versus consensus of
3.2%. Australian treasurer Swan said hailed the data as a "remarkable
outcome" and "reaffirms Australia's position as one of the strongest
economies in the world". Also, Swan noted that "in through the year
terms, this result is the fastest growth in over four years, which have been
the most turbulent in the global economy since the GreatDepression of the 1930s."
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