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After last month’s shock hold, has the Reserve Bank of Australia decided to raise, hold, or cut interest rates at its second meeting of the new financial year? Find out here.
In its July meeting, the board of the Reserve Bank of Australia decided to hold the cash rate at 3.85 per cent. Today, it has cut the cash rate by 0.25 per cent, bringing it to 3.6 per cent.
In a statement, the board said: “Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and potential supply closer towards balance. In the June quarter, trimmed mean inflation over the year fell to 2.7 per cent, broadly as expected in May.
“Headline inflation, which has partly been affected by temporary cost-of-living relief measures, was 2.1 per cent, also as forecast. Updated staff forecasts for the August meeting suggest that underlying inflation will continue to moderate to around the midpoint of the 2–3 per cent range, with the cash rate assumed to follow a gradual easing path.
“Uncertainty in the world economy remains elevated. There is a little more clarity on the scope and scale of US tariffs and policy responses in other countries, suggesting that more extreme outcomes are likely to be avoided.
“Trade policy developments are nevertheless still expected to have an adverse effect on global economic activity, and there remains a risk that households and firms delay expenditure pending still greater clarity on the outlook. As in May, the forecasts assume that both effects weigh on activity and inflation in Australia for a period.”
