Australia shocks everyone with a surprise rate cut to 2.75%

Rate has bee unchanged since December.

According to BBVA, at its monthly policy meeting, the Reserve Bank of Australia cut interest rates to a record low of 2.75%.

While anticipated by a number of market participants, the consensus was for no change, after the RBA had kept the rate unchanged at 3.00% since December.

Here's more from BBVA:

The accompanying policy statement suggests the cut was aimed at curbing the strength of the AUD: “The exchange rate,… has been little changed at a historically high level over the past 18 months, which is unusual given the decline in export prices and interest rates during that time.

“ With the inflation outlook well within the official 2-3% medium-term target range, the RBA had flagged the scope for further rate cuts and “decided to use some of that scope.”

Today’s action brings the cumulative rate reductions to 200bps since November 2011 as the RBA seems to stimulate growth in Australia’s non-mining domestic sectors. While further rate cuts cannot be ruled out, under our baseline of 3.0% growth in 2013, we expect rates to remain at their new level through the rest of the year. The AUD depreciated sharply following the announcement, to below 1.02 against the USD, its weakest level since mid-2012.