The Reserve Bank decision to cut the cash rate in December has been revealed as a close decision, with the board having to weigh Australia's boom against a European bust.
As the year draws to a close, the minutes of the RBA's meeting in early December show the board was satisfied with recent domestic economic data, with overall growth "consistent with trend".
"There had been further evidence that a major investment boom was in progress and the overall economy was expanding at a pace broadly in line with trend," the RBA minutes read.
"Australia's main trading partners were also still recording solid growth. This did not suggest any strong need to cut interest rates."
However, the RBA's assessment that sovereign credit and banking problems in Europe presented a risk of subdued economic activity and the "non-trivial" possibility of a sharp contraction spurred action.
"Developments in Europe continued to pose downside risks to the global economy and, consequently, also to Australia," the RBA minutes stated.
"These risks had, if anything, increased though the timing and magnitude of any effects that might flow from them remained very difficult to predict."
The RBA said with inflation currently within its target, there was scope for the 0.25% cut.
Do you have more than $200k in your super fund? You could use your super to buy property - Find out how
Top Suburbs :
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.
We value your privacy and treat all your information seriously - you can check out