Parramatta small businesses and mortgage holders will be the winners from the Reserve Bank’s decision yesterday to cut interest rates by 0.25 per cent this week, Parramatta MP Julie Owens said.
Ms Owen said the cut was evidence of why it was so important to be returning the budget to surplus.
“A family on $300,000 standard variable rate mortgage is now paying more than $3500 a year less in repayments,” she said.
Ms Owens said it added to the relief the federal government was already providing in the budget through the Schoolkids Bonus.
She also highlighted the strength of Australia’s economy.
“It’s no secret that Australia has one of the strongest economies in the world,” she said.
“We’re expected to outperform every major advanced economy over the next two years.
“But we understand that many Australians feel like it’s someone else’s boom.
“That’s why at the centre of this year’s budget was a Spreading the Benefits of the Boom package to give every Australian a stake in the mining boom.”
The Reserve Bank stands ready to cut rates again following yesterday's 0.25 percentage point reduction if the global economy slows further or if consumers fail to recover their confidence once the carbon tax is introduced.
The major banks are expected to detail their positions from today, with few expected to pass on the entire rate fall.
The Bank of Queensland was the first to move within minutes of the Reserve Bank yesterday, lowering its rates by 0.20 points, taking its standard variable rate to 6.91 per cent.
ANZ will announce its decision on Friday. National Australia Bank said it stood by its commitment to offer the lowest rate of the big four.
The Reserve Bank said it cut its official cash rate in part because of a slowdown in China and turmoil on financial markets.
It believes lobbying about the carbon tax is acting as a drag on consumer confidence and obscuring the benefit of the income tax cuts that will come into force with the tax on July 1.
The governor's statement issued after yesterday's meeting referred to confidence obliquely, saying that despite modest economic growth and low unemployment, households and businesses continued to "exhibit a degree of precautionary behaviour".
If confidence does not lift and the global financial situation gets worse the bank will cut rates again. It believes the low inflation rate gives it room to do so.
Treasurer Wayne Swan raised the possibility of further cuts yesterday, saying the Reserve Bank had "further room to move". He appealed for Australians to become more confident, saying it was important they understood the economy was strong compared to the rest of the world.
The Reserve Bank's cash rate stands at 3.5 per cent, just half a percentage point above the low of 3 per cent during the global financial crisis. Then rates rose to 5.75 per cent. Before yesterday's cut they stood at 7.05 per cent.
Official advice provided to the Treasurer says the big four can afford to pass on the cut in full.
The difference between official cash rates and the standard variable rates charged by banks has blown out to the widest level since banks began pushing through out-of-cycle interest rate rises four years ago.
But in yesterday's statement, the Reserve Bank said renewed international turmoil was pushing up bank funding costs once more.