Particle.news
Download on the App Store
33 ARTICLES
·
3d ago

RBA Cuts Cash Rate to 3.6% and Downgrades Productivity Outlook

It will decide future cuts meeting by meeting after lowering its trend productivity assumption to 0.7%; GDP growth forecasts were reduced, with living-standards outlook cut as well.

Image
The exterior of the Federal Reserve building is seen in Washington, D.C., U.S., June 14, 2022. REUTERS/Sarah Silbiger/File Photo
People cross a bridge near the Sydney Tower Eye in the Central Business District (CBD), Sydney, Australia, July 9, 2025. REUTERS/Hollie Adams/File Photo
U.S. Treasury Secretary Scott Bessent attends a meeting between President Donald Trump and Philippine President Ferdinand Marcos Jr., in the Oval Office at the White House in Washington, D.C., U.S., July 22, 2025. REUTERS/Kent Nishimura/File Photo

Overview

  • The RBA board voted unanimously on August 12 to reduce the official cash rate by 25 basis points to 3.60%, marking its third cut this year.
  • The bank lowered its medium-term productivity growth assumption from 1% to about 0.7%, trimming GDP growth projections by roughly 0.2–0.3 percentage points.
  • June-quarter consumer price inflation slowed to 2.1%, with a 2.7% trimmed mean, while the unemployment rate rose to around 4.3%, reinforcing the case for rate relief.
  • Major banks have passed on most of the cut, saving borrowers with a $600,000 mortgage about $90 a month and boosting housing borrowing capacity.
  • Market swap rates fully price two more cuts by early 2026 but assign only about a one-third probability to a September move, reflecting the RBA’s meeting-by-meeting, data-dependent approach.