The Reserve Bank of Australia’s (RBA) one-point cut in the official cash rate could be followed by a coordinated reduction by global central banks later today, economists at ANZ Bank say.
The cut in RBA’s cash rate was double the size economists had predicted and marks the biggest reduction in over 16 years.
“Rumours are now circulating that today’s aggressive move by the RBA is the precursor for coordinated interest rate cuts by global central banks tonight,” ANZ economists Warren Hogan and Katie Dean said in a research note.
“Given the depths of the global credit crisis, this cannot be ruled out.”
They said apart from the US Federal Reserve, the European Central Bank and the Bank of England, other central banks that could possibly move tonight are the central banks of Denmark, Norway, Sweden, Switzerland and Canada.