MNI BRIEF: RBA Lowers Cash Rate 25bp To 4.10%
MNI (MELBOURNE) - The Reserve Bank of Australia Board lowered the cash rate 25 basis points to 4.10% on Tuesday, its first move lower since November 2020.
In a statement following the decision, the Board said underlying inflation had fallen faster than expected following Q4’s 3.2% y/y result. “There has also been continued subdued growth in private demand and wage pressures have eased,” the Board noted. “These factors give the Board more confidence that inflation is moving sustainably towards the midpoint of the 2–3% target range.”
The Board’s decision was largely expected. (See MNI RBA WATCH: RBA Expected To Cut, Despite Reservations) Markets had priced in an over 90% chance of a cut prior to the meeting.
The Board, however, stressed upside risks remained and monetary policy would continued to be restrictive. “The forecasts published today suggest that, if monetary policy is eased too much too soon, disinflation could stall, and inflation would settle above the midpoint of the target range,” the board added. “In removing a little of the policy restrictiveness in its decision today, the Board acknowledges that progress has been made but is cautious about the outlook."