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The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to 3.60%, marking its third reduction this year and providing long-awaited relief to struggling homeowners.
The decision, announced after the RBA’s August meeting, was unanimous and followed earlier cuts in February and May. It comes after the central bank surprised markets by holding rates steady in July. The current cash rate is now at its lowest level in two-and-a-half years.
RBA Governor’s statement described the move as “appropriate” in light of easing inflation, which is now trending back toward the target range of 2–3%, and a slight softening in the labour market. Since the beginning of 2025, the cash rate has dropped by a total of 75 basis points.
While inflation has significantly fallen from its 2022 peak, the bank remains cautious, citing ongoing uncertainty in global economic conditions. The RBA also indicated it will continue to be “data dependent” in determining future rate adjustments.
Economists welcomed the cut but questioned its impact on Australia’s sluggish consumption and investment climate. KPMG’s chief economist Brendan Rynne called the decision “better late than never” but warned that it might not be enough to boost economic growth.
Treasurer Jim Chalmers hailed the move as a step that will ease the pressure on millions of Australians with mortgages. “These rate cuts won’t solve every problem in our economy but they will certainly help,” he said.
According to Finder, a $500,000 mortgage holder could save around $2,884 annually if lenders pass on the cut in full, while those with $1 million in debt could save approximately $5,768 per year. However, experts caution that the relief may also fuel higher property prices as borrowing capacity improves.
With inflation under control, some analysts predict at least one more rate cut before year’s end.
Source: Various News Outlets
