Australia’s central bank cut its benchmark rates by 25 basis points on Tuesday, as low inflation allows the country room to loosen its monetary policy and boost its slowing economy.
The Reserve Bank of Australia also downgraded its full-year GDP forecast for 2025 to 1.7% from 2.1%, saying that weaker-than-expected growth in public demand in early 2025 was unlikely to be offset through the rest of the year.
The country’s benchmark rates are now to 3.6%, their lowest since April 2023, and in line with expectations of economists polled by Reuters.
The RBA said that inflation had dropped “substantially” since the peak in 2022, with steeper interest rates bringing aggregate demand and potential supply “closer towards balance.”
Inflation in Australia came in at 2.1% in the second quarter, its lowest since March 2021 and near the end of the RBA’s 2%-3% range.
