As expected, the Reserve Bank of Australia (RBA) cut the official cash rate by 0.25% to 3.60%. The decision was unanimous among board members.
In its media release accompanying its decision, the RBA noted that “inflation has continued to moderate”, down “substantially since the peak in 2022”. It also signalled further “gradual” rate cuts ahead.
“Updated staff forecasts for the August meeting suggest that underlying inflation will continue to moderate to around the midpoint of the 2–3% range, with the cash rate assumed to follow a gradual easing path”.
The RBA noted that the “outlook remains uncertain”, both domestically and abroad:
“With underlying inflation continuing to decline back towards the midpoint of the 2–3% range and labour market conditions easing slightly, as expected, the Board judged that a further easing of monetary policy was appropriate”.
“This takes the decline in the cash rate since the beginning of the year to 75 basis points. The Board nevertheless remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and potential supply”.
Markets are tipping another two 0.25% rate cuts by mid-2026.
