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Reserve Bank of Australia cuts cash rate

The Reserve Bankof Australia decided to cut the cash rate by 25 basis points to 1.75%,effective May 4, following lower-than-expected inflationary pressures.

The central bank said May 3 that recent data has indicated thatinflation has been unexpectedly lowand will likely continue going forward. GDP growth in Australia has picked up from2015 and is expected to continue in 2016, but at a more moderate pace.

The central bank said several factors are assisting the economyto make necessary economic adjustments, such as low interest rates supporting demandand the lower exchange rate helping the traded sector. It added that the potentialrisks of lower rates in the housing market are currently lower than they were inthe same period of 2015.