By JAMES GLYNN
SYDNEY—Australia's central bank slashed its cash-rate target by 0.50 percentage point to 3.75% Tuesday, following a policy meeting earlier in the day.
The cut by the Reserve Bank of Australia surprised financial markets and was the first easing since December. Economists had been expecting a 0.25-percentage-point cut.
It was the biggest single move in interest rates since February 2009, when the RBA was still managing the collapse in global confidence following the demise of Lehman Brothers.
The sharp reduction in rates comes amid signs the economy has slowed sharply in recent months in areas outside of the booming mining sector.
Inflation has also moderated substantially, clearing a path for the RBA to lower interest rates.
The RBA is expected to announce downwardly revised estimates for both economic growth and inflation in a quarterly report Friday.
Australia's economy is being contorted by opposing forces. A record mining boom is driving a favorable investment story, but elsewhere, a soaring Australian dollar is damping activity in key sectors like manufacturing and tourism.
Consumer demand also remains subdued as the global economic backdrop keeps financial markets on edge, curbing business and consumer confidence.
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