The Reserve Bank of Australia (RBA) was on May 2, 2022 at the Central Bank Building in Sydney, Australia.
Brendon Thorne | Bloomberg | Getty Images
The Reserve Bank of Australia lowered its benchmark interest rate for the first time in four years on Tuesday, joining the ranks with other major global central banks as softening inflation allows for space for easing policy.
The RCMP cut rate increased by 25 basis points to 4.10%. According to Tuesday’s statement. This marks the first time since the RCMP has been relaxed In November 2020, when central banks lowered their critical rate to record lows, When it struggles with the slow economy during the pandemic.
“While today’s policy decisions recognize the welcome progress of inflation, the board remains cautious about the prospect of further policy easing,” RBA board members said in a statement.
Since November 2023, the central bank has stabilized its policy interest rate at 4.35%, after extending 13 interest rate hikes to tame inflation.
Tuesday’s decision was in line with market expectations, with government bonds expecting interest rates lower in recent weeks. Australia’s 10-year government bond yields have fallen by nearly 20 basis points since January 13 to 4.450%.
The RCMP lags behind major central banks around the world and began a loose cycle late last year.
In the last policy meeting in December, the central bank Say this is more confident That Inflation is falling This may make it amplify policy at some stage.
Australia’s inflation in 12 months By December quarter, it fell to 2.4%Australian Bureau of Statistics data showed that it was 2.8% in the 12 months to the September quarter.
The RBA has fixed the midterm inflation target between 2% and 3%. On a quarter-based consumer price index Up 0.2% for the quarter ended in December0.3% softer than the forecast.
One factor that prevents the decline in cash interest rates is the advantage of the labor market. Unemployment hovers around historical lows The December level was 4.0%.
Cuts in borrowing costs will also be a shot in the Labour government’s arm, preparing for this year’s tough elections as economic growth slows.
“There is obvious uncertainty about the outlook for domestic economic activity and inflation. The core forecast is that as income growth increases, household consumption increases. However, in terms of consumption risks, any possible consumption is It’s slower than expected. ” said.
The Australian dollar rose 0.22% against the dollar on Tuesday to 0.6340. The ASX 200 index extended losses Tuesday, down 0.6%.
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