 Global economy drives interest rate cut
With major developed countries in recession the International Monetary Fund has concluded that the world economy is at a standstill.
Leaked details from a IMF report show that global growth is expected to be just 0.5per cent this year.
Australian interest rates are expected to fall 100 basis points next month, which would cut the official interest rate to 3.25 per cent and, if passed on in full by the banks, would reduce standard home loan rates to about 5.9 per cent.
Wayne Swan said he wouldn't comment on the IMF report but agrees that the economy needs careful attention.
"We're now facing the prospect of a deeper and more protracted global recession. This will clearly have an impact on growth and jobs," the Treasurer said. "There are no quick fixes, but the Government will continue to take whatever action is necessary and responsible to support jobs and growth amid these very difficult global conditions."
The report also accepts there is dramatic slowing growth in China and India, and the US economy is expected to contract by 1.6 per cent. Europe will shrink by 2 per cent and Japan by 2.6 per cent.
The IMF expects the world economy to recover in 2010, with major economies enjoying small gains and with a return to 3 per cent global growth.
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