RBA cites weaker economy in decision to cut policy rate

The Reserve Bank of Australia (RBA) has slashed its benchmark cash interest rate by 50 basis points to 3.75% in a bid to spur the economy after the release of weaker-than-expected economic growth.

RBA governor Glenn Stevens said that, while a "deep downturn" in the global economy had not yet taken place, there remained significant threat of "adverse shocks" to the Australian economy from the eurozone sovereign debt crisis.

The RBA was given some room to manoeuvre as inflation remained below 2%

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