The Reserve Bank of Australia (RBA) slashed the official cash rate by 100 basis points to 4.25 per cent following yesterday’s monthly board meeting.

“The main thing about interest rates is that their effects typically aren’t seen until three to six to eight months later,” Mr Murphy said.

“This is because for example with a mortgage someone might be getting an extra $60 a month which they take when they pay off debts so it takes a while to adapt until they start to realise their cash flow is a bit better.”

He said the current economic slowdown in Australia could also be attributed to the interest rate rises earlier in the year.

“There are certainly a lot of economists saying the last one or two rises were mistakes,” he said.

Mr Murphy said these rate cuts had come at a good time for the economy.

“In a sense the [Rudd Government] packages are going to have a positive effect on Bathurst in December and January. And then these rate cuts won’t have an effect until Easter,” he said.

He said he thought Bathurst would survive the current economic global meltdown well compared to other regions in the country.

“If you look at Australia we’re among the best placed in the world economy to weather this storm and I do believe it will be a big storm,” he said.

“Especially in the Central West as opposed to Sydney where the financial sector is. I think it will not be easy but Bathurst is best placed to weather the storm.”

Mr Murphy said some visible effects of the rate cuts will be that it will be cheaper to borrow money and people with loans will have extra cash.

He said it would be to the region’s advantage if the Australian dollar does not climb higher than 70 or 80 cents to a US dollar.

“I wouldn’t want it higher than that for the trade exposed areas and by trade exposed I mean exporters or competing with imports. Bathurst is holding up pretty well because of the diversity in the economy - we’ve got mines, manufacturers, the university, the retail sector, farmers,” he said.

The Western Region Institute will conduct a business survey to gauge the amount of spending in Bathurst and results will be released in the new year.