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Australia’s central bank cut interest rates for the first time on Tuesday as inflationary pressures began to show signs faster than expected.
The Reserve Bank of Australia lowered its cash rate by 0.25 basis points to 4.10%.
However, the central bank said in a statement that it will retain restrictive policies due to the strength of the job market and the uncertain global economic outlook.
“Although today’s policy decision recognizes the welcome progress of inflation, the board has taken a cautious approach to further policies,” the Australian Reserve said.
Central banks have been under pressure to begin to ease, with some economists warning that their restrictive monetary policy could push the country into recession due to pressure on higher borrowing costs for mortgage holders.
Australia was scheduled to hold elections in mid-May, but Prime Minister Anthony Albanese has not yet set a date because the government is already fighting the high cost of living. Political strategists believe that the slowdown is a critical moment before polls.
Australia’s treasurer Jim Chalmers welcomed the move because “the rate relief that Australians need and deserve” but added that the task has not been completed yet.
“It won’t solve all the problems in our economy or household budgets, but it will help,” he said.
Official data released by economists last month showed inflation fell to 2.4% in the December quarter, which gave central banks more assurances to mitigate monetary policy, economists have already put the long-awaited cuts (from the 2018-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds-year-olds- First since November 2020) Posted.
Tuesday’s cuts partially reversed the 13-speed gain since May 2022, but other major central banks, especially the Fed, pivoted to a more hawkish stance as inflation persists.
