MNI BRIEF: RBA Lowers Cash Rate To 3.6%

The Reserve Bank of Australia cut the cash rate by 25 basis points to 3.6% on Tuesday, with forecasts now showing core inflation reaching the 2.5% midpoint of its target range by end-2027.

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

The move was widely expected. (See MNI RBA WATCH: Board Set To Cut As CPI, Labour Ease)

The Board cited uncertainty around aggregate demand and potential supply, and said policy remains well placed to respond decisively to international developments if needed.

The RBA’s August Statement on Monetary Policy made only slight adjustments to May’s projections, including a lower labour productivity outlook and a reduced market-implied cash rate path. Trimmed mean inflation is seen at target midpoint by late-2027, unemployment is forecast to peak at 4.3%, and the wage price index is now expected at 2.9% by December 2026, down 10bp.

Governor Michele Bullock will hold a press conference at 3:30pm AEST.