RBA reveals latest cash rate decision amid falling inflation
The Reserve Bank has decided to reduce the cash rate target following its latest board meeting.
At its meeting today, the RBA decided to lower the cash rate target by 25 basis points to 3.85 per cent.
The RBA's decision to reduce interest rates follows further drops in underlying inflation, with recent figures indicating it had fallen within the RBA's target range.
AMP chief economist Dr Shane Oliver noted that wages growth has also been in line with RBA forecasts, adding to the RBA's confidence that inflation is falling sustainably to the mid-point of the target range.
"At the same time GDP growth looks to be running weaker than expected with flat consumer spending in the March quarter and global trade uncertainty posing a downside risk to the economic outlook," said Oliver.
RSM Australia economist Devika Shivadekar agreed that with headline inflation sitting below the mid-point of 2.5 per cent for two consecutive quarters and trimmed mean inflation breaching the target range in the previous quarterly figures, the RBA now "feels comfortable delivering another 25 basis point cut".
BIS Oxford Economics Sean Lankcake said while news on the tariff front had now improved, the economy would still need to weather a sizeable "uncertainty shock" through the second quarter at least.
"With upside inflation risks dissipating, the RBA can afford to lend the economy some more support," said Langcake.
Accounting Home Loans general manager Aylin Unsal said the RBA announcement was welcome news for both mortgage holders and prospective buyers.
"For an owner-occupier with a $600,000 debt and 25 years remaining on the loan, a 0.25 percentage point cut could see monthly repayments drop by $91 for existing variable rate borrowers," said Unsal.
Unsal said the latest rate cut may increase the borrowing power of buyers, expanding the range of options they have in the market.
