THE Reserve Bank of Australia (RBA) has announced a 25 point cut to interest rates in a pre-Christmas attempt to boost the economy.
Reserve Bank of Australia governor Glenn Stevens said the board decided to lower the cash rate by 25 basis points to 3.25 per cent effective today.
Murwillumbah District Business Chamber president Toni Zuschke said the cut announcement has come just in time.
"It's well overdue," she said.
"Businesses and families are doing it tough and are looking anywhere to find that extra dollar.
"It's almost a reactive measure to what's really going on and it's about time they realise people are drowning not waving."
Mrs Zuschke said although it would not save people an outstanding amount of money it would help to pay the bills and the looming Christmas costs.
During these school holidays Mrs Zuschke said she noticed petrol was a whopping $1.47 in a town with no public transport.
"How can you take the kids anywhere when petrol is so expensive?" she said.
"This is an effort to boost the economy and take a little bit of the pressure off."
The cuts come after the outlook for growth in the world economy has softened over recent months, with estimates for global GDP being edged down and risks to the outlook still seen to be on the downside.
Mr Stevens said in a statement that economic activity in Europe was contracting, while growth in the United States remained modest.
"Growth in China has also slowed, and uncertainty about near-term prospects is greater than it was some months ago," he said.
"Around Asia generally, growth is being dampened by the more moderate Chinese expansion and the weakness in Europe."
Key commodity prices for Australia remain significantly lower than earlier in the year, even though some have regained some ground in recent weeks.
The statement said the terms of trade had declined by more than 10% since the peak last year and would probably decline further, though they were likely to remain historically high.
We will see in the next few days if any banks will follow suit after the Bank of Queensland announced it would cut variable rates by 0.20%.