Financial News: Australia Cuts Key Interest Rate By 25 Bps

Australia Cuts Key Interest Rate By 25 Bps

02/17/2025 - 23:05:00 (RTTNews)

(RTTNews) - The Reserve Bank of Australia lowered its benchmark rate by a quarter-point as upside risks to inflation eased but policymakers remained cautious on prospects for further policy easing.

The policy board of the RBA governed by Michele Bullock decided to reduce the cash rate target by 25 basis points to 4.10 percent. The decision came in line with expectations.

The interest rate paid on Exchange Settlement balances was cut to 4 percent.

"The Board's assessment is that monetary policy has been restrictive and will remain so after this reduction in the cash rate," the bank said.

"Some of the upside risks to inflation appear to have eased and there are signs that disinflation might be occurring a little more quickly than earlier expected," the bank added.

However, policymakers observed that if the policy is eased too much too soon, then disinflation could stall and inflation would settle above the midpoint of the target range.

"In removing a little of the policy restrictiveness in its decision today, the Board acknowledges that progress has been made but is cautious about the outlook," RBA said.

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