Australia slashes interest rates

The Reserve Bank of Australia has announced a cut of three-quarters of one per cent, taking the cash rate down to 5.25 per cent.

Revealing the decision yesterday, governor of the bank Glenn Stevens said the move had been motivated by signs of slowing economic activity and a high probability that inflation will soon fall.

It is the third cut by the bank in as many months, following a reduction of one per cent last month and by 0.25 per cent in October.

Such moves may help lower mortgage costs for those thinking of investing in property in Australia.

Last week the RP Data-Rismark National Property Values Indices showed that property prices in the country have only dropped by 1.4 per cent in the first nine months of 2008.

Rismark International's managing director Christopher Joye told AAP house prices will "almost certainly rise over the medium to long-term".

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