The Reserve Bank of Australia (RBA) today announced it has reduced the cash rate target by 25 basis points, bringing it to 3.60%.
The decision, made at today’s meeting, reflects the RBA’s assessment that inflation is continuing to ease and labour market conditions are gradually softening.
According to the RBA, trimmed mean inflation fell to 2.7% over the year to June, down from the peak in 2022, as higher interest rates helped bring demand and supply into better balance. Headline inflation came in at 2.1%, influenced partly by temporary cost-of-living relief measures. Updated forecasts suggest inflation will continue to trend towards the midpoint of the 2–3% target range over the period ahead.
While the global economic outlook remains uncertain, the RBA noted some improved clarity around US trade policy and other international developments, which may reduce the risk of extreme scenarios. At the same time, global factors are still expected to have a dampening effect on economic activity.
Domestically, the RBA observed that private demand is recovering, real household incomes are improving, and some financial conditions have eased. Labour market conditions remain relatively tight but have eased slightly, with unemployment at 4.3% in June. Wages growth has moderated from its peak, although productivity growth remains weak.
This latest cut brings the total reduction in the cash rate since the start of the year to 75 basis points. The RBA said it will continue to closely monitor both domestic and international conditions to ensure it meets its mandate of maintaining price stability and full employment.
Source: Reserve Bank of Australia
Reported by: Morris