Australia lowers rate to 4.5%

The Reserve Bank of Australia (RBA) has cut interest rates in a bid to boost growth amid fears of a slowdown in the global economy.The central bank lowered its key rate to 4.5% from 4.75%, the first cut since April 2009.The move comes amid fears that the debt crisis in Europe and slowdown in the US may hurt global economic growth.RBA said it was concerned about the impact of global uncertainty on its economy,"Information about the Australian economy suggests moderate growth overall," the bank said in a statement."The terms of trade have now peaked and will decline somewhat in the near term," it added.Apart from the global pressures, the central bank has also had to deal with a slowing domestic demand.While Australia's resources and mining sector have been booming, other areas of the economy such as retail sales have witnessed a slowdown in recent times."In other sectors, cautious behaviour by households and the high exchange rate have had a noticeable dampening effect." the bank said.According to the latest data by the Housing Industry Association, new home sales in Australia fell to their lowest level in 11 years in September.Analysts said that as fears of a global slowdown gather pace, the central bank is worried that demand may fall further."The RBA's decision to cut rates by 0.25% is an admission that domestic demand is feeling the pressure," said Peter Escho of City Index."Clearly, the RBA is using its toolbox to cushion the impact," he added.