The Reserve Bank of Australia has made the decision to cut interest rates by 25 basis points, marking the third reduction in six months. The new rate stands at 3.6%, aligning with analysts' expectations.
Interest Rate Cut
The Reserve Bank of Australia (RBA) announced that the decision to reduce rates was driven by a downgrade in the annual economic outlook for the country. Expected economic growth has been revised down to 1.7% from a previous estimate of 2.1%. This move is expected to significantly affect millions of mortgage holders across the country.
2025 Economic Outlook
The central bank has lowered its economic growth forecast for 2025, warning that the economy cannot sustainably grow faster than 2% per year. It now expects productivity growth to be just 0.7% per year over the medium term, down from earlier estimates of 1%.
Inflation and Growth Expectations
According to the RBA, inflation in Australia was recorded at 2.1% in the second quarter, falling within the RBA’s target range. It is anticipated that by December 2026, cash rates may drop to 2.9%. RBA Governor Michele Bullock confirmed she is monitoring economic data to inform future monetary policy decisions.
The cut in interest rates represents a significant measure in response to shifting economic forecasts. This decision may impact a wide range of borrowers and reflect the overall economic situation in the country.
