Financial News: Australia Cuts Key Interest Rate By 25 Bps

Australia Cuts Key Interest Rate By 25 Bps

05/20/2025 - 01:07:00 (RTTNews)

(RTTNews) - Australia's central bank lowered its benchmark rate by a quarter-point on Tuesday as risks to inflation became more balanced.

The policy board of the Reserve Bank of Australia, governed by Michele Bullock, decided to cut the cash rate target to 3.85 percent from 4.10 percent.

Previously, the bank had reduced the rate by 25 basis points in February, which was the first cut since 2020.

The board judged that the risks to inflation became more balanced. Inflation reached the target band and upside risks appear to have diminished as international developments are set to weigh on the economy, the board observed.

Headline inflation is forecast to rise over the coming year to around the top of the band as temporary factors unwind and underlying inflation is projected to be around the midpoint of the 2-3 percent range throughout much of the forecast period.

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