The Reserve Bank of Australia (RBA) today (Tuesday) cut its benchmark interest rate for the first time in more than four years, following in the footsteps of other global central banks to give room for weakening inflation.
The RBA cut rates by 25 basis points to 4.10%, marking the first easing since November 2020 when the central bank cut its key rate to its lowest level as it grappled with a slowing economy during the pandemic.
RBA board members in a follow-up statement said the policy decision recognised progress in welcoming inflation trends and they remained cautious about the prospects for further policy easing.
Analysts predict the easing cycle will continue with around two more rate cuts to anchor the 3.60% position.
The central bank has kept its policy rate steady at 4.35% since November 2023, following an extended period of 13 rate hikes to tame inflation.
The latest meeting's outcome was in line with market expectations as government bonds have risen in recent weeks on expectations of a rate cut.
The yield on Australia's 10-year government bond has fallen nearly 20 basis points since January 13 to 4.450% on Tuesday.
The RBA has lagged behind major global central banks that have been on an easing cycle since late last year.
According to Australian Bureau of Statistics data, Australian inflation in the 12 months to the December quarter eased to 2.4% from 2.8% in the July to September quarter.
