The Reserve Bank Board has decided to lower the cash rate target to 4.10% from 4.35% and the interest rate on Exchange Settlement balances to 4.0%.
Key Points:
- Inflation Moderation: Inflation has fallen significantly since its 2022 peak, with underlying inflation at 3.2% in Q4 2024. Demand growth remains subdued, and wage pressures have eased, giving confidence that inflation is moving toward the 2–3% target range.
- Risks Remain: Despite easing inflation, strong labour market data and revised inflation forecasts for 2026 suggest caution in further policy easing.
- Economic Uncertainty: Growth remains weak, household spending recovery is uncertain, and labour market tightness persists. Productivity growth is lagging, affecting unit labour costs.
- Global Factors: Uncertainty remains high due to geopolitical and policy risks. While many central banks are easing policies, expectations for further cuts have tempered, particularly in the U.S.
- Policy Outlook: The RBA remains focused on returning inflation to target sustainably. While policy is still restrictive, the Board is cautious about easing too quickly, as premature action could stall disinflation. Future decisions will be data-driven, considering global and domestic economic conditions.
The Board is committed to ensuring inflation returns to target and will adjust policy as needed.
We have received notifications from the major banks and secondary lenders stating that they will pass on the full 0.25% interest rate cut to their variable interest rate home and investment loans.
Future RBA Policy Announcements
A reminder that the schedule of RBA meetings has changed from 11 in a year to 8, held 5-7 weeks apart. Monetary Policy Announcements will be made at 2.30pm on the following days:
- March 4, 2025
- April 1, 2025
- May 6, 2025
- June 3, 2025
- July 1, 2025
- August 5, 2025
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