RBA Cuts Interest Rates as Inflation Eases: What it Means for Australians?

Last week, the Reserve Bank of Australia (RBA) reduced the official cash rate by 0.25 percentage points to 3.85%, marking the second rate cut this year and bringing the rate below 4% for the first time in two years. This decision follows a significant decline in inflation, with the annual trimmed mean inflation falling to 2.9% and headline inflation at 2.4%, both within the RBA’s target range of 2–3%.

The rate cut aims to support economic growth amid global uncertainties, including trade tensions and geopolitical conflicts.  For Australian households, this translates to potential savings on mortgage repayments, with estimates suggesting reductions ranging from $91 to $152 per month, depending on loan size.

While major banks like Commonwealth Bank, NAB, ANZ, and Westpac have committed to passing on the full rate cut to customers, several smaller lenders are still reviewing their positions. Economists anticipate the possibility of further rate cuts if economic conditions warrant additional support.

Overall, the RBA’s decision reflects a shift towards a more accommodative monetary policy stance, aiming to balance the dual objectives of sustaining economic growth and maintaining inflation within the target range.