Mega-trend 3: The fast-falling OCR

Mega-trend 3: The fast-falling OCR
The fall in the Official Cash Rate in 2008 was the biggest ever in the history of this key rate.  It has been cut from 8.25% to just 5% over the second half of this past year. The slicing started in earnest on July 24, with a 0.25% cut, was followed on September 11, with a 0.50% cut, and then on October 23 with a massive 1.00% reduction. But these policy actions were trumped by the biggest reduction of all on December 4, when the OCR was reduced by 1.50%, making a total of 3.25% reduced in just six months. The OCR fell from its historic high of 8.25% to just 5.00%. Bernard Hickey reviews the events and pressures that led to this fast fall. He also assesses the flow-through effect to borrowers, the impact these changes have had on savers, and previews the expected policy responses in 2009.    

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