Australia Cuts Cash Rate to 2-Year Low of 3.6%

2025-08-12 04:36 By Farida Husna 1 min. read

The Reserve Bank of Australia slashed its cash rate by 25bps to 3.6% at its August meeting, matching market expectations and bringing borrowing costs to their lowest since April 2023.

The unanimous decision marks a cumulative 75bps reduction since the start of the year, reflecting a sharp slowdown in inflation from its 2022 peak, its return to the RBA’s 2–3% target range, and a softer labour market.

Despite easing cost pressures, the central bank remains cautious amid rising uncertainty in domestic and global conditions, including trade policies that could dampen growth.

The RBA noted that monetary policy is well-positioned to respond to global developments.

It also expects household consumption growth to recover as real incomes rise, though weak demand in some sectors is limiting firms’ ability to pass on costs, posing a risk to momentum.

Policymakers stressed they will remain data-driven, monitoring demand, inflation, labour markets, and financial conditions to guide future moves.



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