Financial News: Australia Trims Key Interest Rate For Third Time

Australia Trims Key Interest Rate For Third Time This Year; Cuts Growth Outlook

08/12/2025 - 05:37:00 (RTTNews)

(RTTNews) - The Reserve Bank of Australia reduced its benchmark interest rate by a quarter-point for the third time this year as underlying inflation continued to moderate, while economic growth outlook was lowered due to weaker-than-expected recovery in public demand.

The board decided to trim the cash rate target by 25 basis points to 3.60 percent. The decision was unanimous.

The third cut this year took the rate to the lowest since March 2023. Previously, the bank had reduced the rate by 25 basis points each in May and February.

"With underlying inflation continuing to decline back towards the midpoint of the 2-3 per cent range and labour market conditions easing slightly, as expected, the Board judged that a further easing of monetary policy was appropriate," the bank said in a statement.

Governor Michele Bullock said there is a little more clarity on the scope and scale of US tariffs and policy responses in other countries, suggesting that more extreme outcomes are likely to be avoided.

She said the monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia.

In the Statement of Monetary Policy, released Tuesday, the bank downgraded its GDP growth forecast as weaker-than-expected growth in public demand in early 2025 is not expected to be offset through the rest of the year. The growth outlook for the full year 2025 was lowered to 1.7 percent from 2.1 percent. At the same time, CPI inflation forecast was retained at 3.0 percent.

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