 Financial problems in the USA put further pressure on the Reserve Bank of Australia to cut interest rates again next month. Yesterday we saw another major blip in the US economy with the country's fourth-largest investment bank collapsing. It's 158-year history on Wall Street could not save Lehman Brothers, and yesterday announced they will file for bankruptcy.
The Australian share market was immediately affected with financial stocks nudging the All Ordinaries index 1.7 per cent lower. This has prompted calls for the RBA to cut rates even further as banks face higher funding costs in the wake of this latest development.
National Australia Bank's head of research Peter Jolly commented saying "Other things being equal it would make the RBA inclined to cut the cash rate.''
Lehman Brothers lost more than 90 per cent of their value over the past year as the firm lost billions of dollars last financial quarter. The bankruptcy announcement came after a last-ditch effort to find a buyer. Lehman Brothers Australia said yesterday about 130 jobs may be affected at its operations in Melbourne and Sydney.
As the RBA releases the minutes to it's September meeting today, and explains the reasons for cutting official rates by 0.25 per cent, many experts are predicting another rate cut during the October meeting.
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