Oz rate cut a full percent

Learning from the lessons in the US, and signalling the direction for the UK, Australia's Reserve Bank has dropped the rate a full percentage point.

The Reserve obviously decided that the punters wouldn't be too happy if the bankers got to keep the half percent that was hinted at. The word was out that the banks were keeping the rate cut to cover 'difficult trading conditions' and keep Australian banks' balance sheets 'healthy'.

The government response was "here have half a percent each" and we saw the largest cut I can remember (last seen 1992, 1990 saw a 1.5% cut), although it wasn't entirely unpredictable. Anything else would have seen someone revolting.

The market is up after initial falls, as expected.

I thought towards a full percent, figuring a 1 pecent cut before Christmas but the odds were really somewhere in between. Xmas early or more to come? (I expect more).

p.s. I dare say Malcolm Turnbull can fairly claim the credit, but remember Kevin is a team player and likely to stick with the team play.

Malcolm has been putting pressure on the banks to pass on the full rate cut to consumers, Westpac has opened with a .80% rate cut on some of their mortgages.