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Australia cuts policy rate to 2-year low as inflation concerns continue to recede

On April 1, 2025, in Sydney, Australia’s central bank lowered its benchmark interest rate by 0.25 percentage points to 3.85%.
The rate cut followed a decline in inflation to 2.4% in the first quarter of 2025 and improved economic indicators allowing for easier monetary policy.
Australia's inflation steadily declined from 7.8% in late 2022 to within the target range of 2% to 3%, while GDP expanded 1.3% year-on-year in the fourth quarter of 2024.
The 0.25 percentage point rate cut was anticipated by economists and prompted Australia's major banks to lower variable home loan rates by the same amount, effective late May to early June.
The RBA indicated continued uncertainty due to global trade tensions but aims to return inflation sustainably to target and expects the terminal rate to reach 3.1% in early 2026.

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