On 1 October 2019, the Reserve Bank of Australia (RBA) decided to cut the cash rate to 0.75%. This is the lowest in Australian history. On the day of the news, the share market rallied. This has often happened on the back of interest rate cuts. If the RBA is cutting rates because of problems with the economy, then why does the share market rally? Why is it a positive for stocks? Borrowing cost of companies When interest rates are …

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