RBA Reduces Interest Rate, Marking Lowest in Two Years
(MENAFN) Australia's central bank, the Reserve Bank of Australia (RBA), today announced a 25 basis point reduction in its official cash rate, bringing it to 3.85 percent. This marks the lowest interest rate seen in two years, and it's the second cut in 2025, following a similar move in February—the first such reduction since November 2020. The RBA's monetary policy board, meeting in Sydney, emphasized its commitment to maintaining low and stable inflation as its primary objective.
The board noted that inflation has decreased "substantially" since its 2022 peak, attributing this progress to the effectiveness of higher interest rates in rebalancing aggregate demand and supply. However, the RBA cautioned about "uncertainties" regarding the economic outlook both domestically and globally. Global economic uncertainty, in particular, has escalated over the past three months, according to the board.
Despite the positive developments on inflation, the RBA stated, "While today's policy decision recognizes the welcome progress on inflation, the board remains cautious on prospects for further policy easing." It added, "The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome."
Treasurer Jim Chalmers expressed his satisfaction with the rate cut, stating he was "really pleased to see" it, and acknowledged that it reflects the "substantial progress we've made on inflation." He added that while "Today's interest rate cut doesn't mean that the job is finished when it comes to the cost of living, but it will help millions of Australians with a mortgage."
Following the RBA's announcement, Australia's "big four" banks have quickly confirmed they will pass on the 0.25 percentage point reduction to their mortgage customers, as reported by an Australian news agency.
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