Australian National Retailers Association chief Margy Osmond

Financial turmoilRBA governor Glenn Stevens noted that recent sharp moves Moncler Online on financial markets were likely to act as a drag on Australia's economy."The effects of the recent turmoil on confidence may result in a period of precautionary behaviour by firms and households," he said in a statement accompanying today's decision.Employment conditions at home have softened and inflation figures have been moderate, giving the RBA room for today's rate cut, Mr Stevens said."Over the past year, the board has maintained a mildly restrictive stance of monetary policy, in view of its concerns about inflation," he said. "With overall growth moderate, inflation now likely to be close to target and confidence subdued outside the resources sector, the board concluded that a more neutral stance of monetary policy would now be consistent with achieving sustainable growth and 2-3 per cent inflation over time."Europe debtSince August, financial markets have plunged then rebounded as fears about a default on sovereign debts by Greece or other European nations flared then fizzled. A deal hammered out by European Union leaders included writedowns of 50 per cent for holders of Greek debt, and the creation a 1-trillion euro ($1.3 trillion) rescue fund helped calm those concerns for now.Still, markets remain sensitive to the prospects of other countries falling into similar troubles as Greece, with Italy and Spain among the leading contenders. Those worries mean the RBA's job in easing interest rates to bolster local confidence may not be done, analysts said."Whilst the bank acknowledged the recently improvement in global financial markets, the bank warns that it is likely to be some time yet before Moncler Women Jackets concerns about the European situation can definitively be laid to rest," said 4Cast Ltd analyst Celeste Tay. "The bank appears slightly concerned about the knock-on effects that this will have on sentiment, especially through the wealth channels. "As such, we see part of the reason behind today's cut was to deliver an added boost to confidence," she said. Retailers, which have struggled as consumers have pared local spending in favour of overseas travel and shopping this year, cheered the decision coming ahead of the crucial Christmas shopping season. "Retail in Australia needs this boost, particularly going into Christmas 2011, a vital holiday period for the sector," said Australian National Retailers Association chief Margy Osmond."After a year where retail figures have hovered around a third of the usual growth rate, despite no movement on interest rates for the past 12 months, retailers have been crying out for some assistance from the central bank."The housing sector will also applaud today's move. Figures out today showed house prices in the September quarter fell the most since the global financial crisis, while new home sales had their worst month in 10 years.Countering those areas of weakness is the ongoing mining boom, with investments in the pipeline worth an estimated $430 billion.The RBA noted that recent falls in commodity prices meant that Australia's terms of trade - the relative prices of our exports versus import costs - have now peaked. While they will "decline somewhat in the near term", the RBA noted, they "remain very high."ExpectationsThe Reserve Bank had stoked expectations of a rate cut with officials in recent weeks saying they had room to move if needed to bolster the economy, particularly if inflation figures remained subdued.Last week, core inflation data - the measure Moncler Mens Coats watched by the RBA - slowed to 0.3 per cent in the September quarter, the weakest pace in 14 years.Financial markets were earlier today pricing in four cuts of today's size over the next 12 months, with three more now to come. That estimate remains little changed after the verdict, with another 90 basis points in cuts now expected over the year.A survey by Bloomberg found 16 of 27 economists had tipped the bank would slice rates by 25 basis points.czappone@fairfax.com.au with Reuters, AAPA rate cut equals about $46 less in monthly mortgage repayments on the average $300,000 loans carried over 25 years. Last week, core inflation data - the measure watched by the RBA - slowed to 0.3 per cent, the weakest pace in 14 years, giving the Reserve Board leeway to cut rates. Conditions in the local and global economy on the other hand continue to present a mixed case about the growth and inflation prospects the central bank monitors. Credit growth has slowed over the year but has shown signs of picking up recently. Retail sales and consumer confidence have been positive for two months running, while recent data from the US has shown improvements there. Closer to home, China's expansion has sent out a few worrying signals about credit bubbles or weaker demand for Australian commodities. Yet the European debt crisis continues to dominate headlines with sentiment alternating between extreme fear and hope for a lasting resolution to the problems.