Prime Minister Malcolm Turnbull has also chided the Reserve Bank of Australia (RBA), saying interest rates have remained high for so long and are still higher.
"Can I just observe that most people in the market would have expected the Reserve Bank to cut rates sooner,” he said.
“Australia's interest rates are still relatively high compared to other comparable countries, but the fact is we are in a global, low-inflation environment, and therefore the Reserve Bank, responding to its mandate, and keeping an eye on its inflation target, cuts rates.”
On Tuesday, the RBA cut Australia’s cash rate to an all-time record low of 1.5%. According to its statement of monetary policy, the RBA’s hand was forced by “very subdued growth in labour costs” and low inflation. The cut to the cash rate is intended to stimulate the economy via a lower Australian dollar (AUD) and provide support to domestic demand.
However, against the textbook economics, AUD climbed higher overnight mainly due to weakening USD and soaring yen.
Interest rate strategists and economists expect the cash rate to drop again in November which would see it plummet to just 1.25%.
In the rate cut announcement, the RBA repeated its concern over appreciating exchange rate.
