THE Australian dollar was in free-fall as markets pounced on fears that prospects for the global economy had taken a sharp turn for the worse.
An economist at JP Morgan, Helen Kevans, said the Reserve's slash in interest rates was to stimulate consumption in the absence of the terms-of-trade boom. "The RBA was banking on the terms of trade pulling the economy forward as the consumer pulled away, but now that source of stimulus is going to disappear," Ms Kevans said.
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