The Reserve Bank of Australia (RBA) has announced the lowering of the official cash rate by 25 basis points, bringing the country’s official interest rate to 4.25 per cent.


RBA Governor Glenn Stevens announced the board’s decision, citing Asia’s and the United States’ midyear growth.


However, Mr Stevens remained echoed the views of many economists on the state of the European economy.


“The sovereign credit and banking problems in Europe, to which European governments are still seeking to craft a full response, are likely to weigh on economic activity there over the period ahead,” Mr Stevens said in a statement.  


A stronger than expected growth rate, coupled with an expected contraction in inflation were the main domestic reasons for the RBA’s rate reduction.


“Overall, the Board concluded, on the basis of all the available information, that the inflation outlook afforded scope for a modest reduction in the cash rate. The Board will continue to set policy as needed to foster sustainable growth and low inflation over time,” Mr Stevens concluded.