The Reserve Bank of Australia (RBA) is considering rate cuts in response to easing inflation, while maintaining a cautious approach to further monetary easing. The announcement, made on February 18, 2025, reflects the central bank’s efforts to balance economic growth with inflation control.
RBA Governor Michele Bullock highlighted the need for a prudent strategy, noting that while rate cuts could support households and businesses, the bank must remain cautious about inflationary risks. The RBA’s benchmark interest rate currently stands at 3.85%, following a series of hikes in 2023 and 2024.
Economists anticipate a 25-basis-point rate cut in the second quarter of 2025, with further easing dependent on economic conditions. The Australian dollar weakened slightly following the announcement, as markets adjusted to the prospect of a dovish policy shift.
