FED:RBA cuts interest rate again=3

AAP General News (Australia)
12-06-2011
FED:RBA cuts interest rate again=3

ICAP senior economist Adam Carr said the decision to cut rates by 25 basis points was
all about curbing the economic challenges coming out of the eurozone.

"It's clear that they've cut in response to events in Europe," he said.

"They note considerable turbulence in financial markets - even in Australia, they note
that financial conditions have tightened.

"The economic view overall hasn't really changed, they just said that output growth
has been on trend, and demand is stronger than that, but those are not grounds for a cut
- this is all to do with global factors."

Mr Carr said the decision was not a negative reflection on the domestic economy's performance.

"Demand - particularly private demand - is very strong in Australia, consumption is
good and our business investment is extraordinary - so our domestic economy is very healthy,"

he said.

"Realistically, they're taking out a bit of insurance to head off any negative events
from Europe.

"The interesting thing will be whether the banks will pass it on, and by how much."

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KEYWORD: RATES UPDATE 3 SYDNEY

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