Australia Central Bank cuts rates to two-year low, signals caution on further easing
The Reserve Bank of Australia (RBA) cut its main cash rate by 25 basis points to 3.60% on Tuesday, citing slowing inflation and a softer labour market, but warned it would proceed cautiously with any further easing.
Wrapping up a two-day policy meeting, the RBA board said core inflation was expected to fall to the midpoint of its 2–3% target range, assuming gradual policy adjustments. The decision was unanimous, following a rare split vote in July when rates were held steady, News.Az reports, citing Reuters.
The Australian dollar was little changed at $0.6508, while bond yields stabilised. Markets see only a 34% chance of another cut in September, but a November move is fully priced in. Headline inflation eased to 2.1% in the June quarter, with core inflation at 2.7% — the lowest in three years. Unemployment rose to 4.3% from 4.1%, reinforcing calls for policy support.
Economists expect at least one more rate cut this year. “With good news on inflation and bad news on unemployment, more easing is warranted,” said Harry Murphy Cruise of Oxford Economics Australia.
The RBA also trimmed its economic growth forecast, citing persistently weak productivity, but maintained its view that inflation would slow and the labour market remain steady.
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