Australia Cuts Key Rate for First Time Since 2001 (Update3)

By Jacob Greber

Sept. 2 (Bloomberg) -- Australia's central bank cut its benchmark interest rate for the first time in seven years amid signs the nation's $1 trillion economy is slowing.
Governor Glenn Stevens and his board reduced the overnight cash rate target by a quarter point to 7 percent in Sydney today, as forecast by 22 of 23 economists surveyed by Bloomberg News.
The biggest slump in retail sales in six years, a slide in business confidence and concern about the global credit squeeze meant ``there was now scope for monetary policy to become less restrictive,'' Stevens said. A report tomorrow will show gross domestic product expanded by the least in two years in the second quarter, according to a survey of economists.
``This is a huge psychological step,'' said Hans Kunnen, head of investment market research in Sydney at Colonial First State Global Management, which holds about $128 billion of assets. ``It's taken a bit of the pressure-cooker atmosphere off the consumer and off business.''