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RBA cuts interest rates to record low in unexpected move

Governor says Aussie growth will be weaker for longer and the jobless rate will peak higher than earlier expected

Sydney

AUSTRALIA'S central bank unexpectedly cut its benchmark interest rate to a record low on Tuesday and said the local currency remains overvalued, joining a dozen global counterparts in easing this year as commodity prices tumble.

The overnight cash rate target was lowered by 25 basis points to 2.25 per cent, Reserve Bank of Australia (RBA) governor Glenn Stevens said in a statement. Growth will be weaker for longer and the jobless rate peak higher than earlier expected, he said.

Stocks surged to an almost seven-year high, the currency traded at a more than 5-1/2-year low, and bond yields dropped to records. Mr Stevens' move follows a collapse in the price of iron ore, which generates A$1 in...

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