The Reserve Bank of Australian cut the cash rate by 25 basis points, to 4.10 percent, at its Board meeting today.
In its Statement after the meeting, it said inflation had fallen substantially since the peak in 2022, as higher interest rates had been working to bring aggregate demand and supply closer towards balance.
“In the December quarter underlying inflation was 3.2 percent, which suggests inflationary pressures are easing a little more quickly than expected,” it stated.
“There has also been continued subdued growth in private demand and wage pressures have eased.
“These factors give the Board more confidence that inflation is moving sustainably towards the midpoint of the 2–3 per cent target range.”
It said upside risks remained, stating some recent labour market data had been unexpectedly strong, suggesting that the labour market may be tighter than previously thought.
“The central forecast for underlying inflation, which is based on the cash rate path implied by financial markets, has been revised up a little over 2026.
“So, while today’s policy decision recognises the welcome progress on inflation, the Board remains cautious on prospects for further policy easing.”
