Sydney (Reuters) – Australia’s central bank cut interest rates for the first time since the 2020 pandemic, he said progress has been made on inflation, despite remaining cautious about the prospect of further easing.
Best-class cuts will provide some relief for borrowers, good news for Prime Minister Anthony Albanese, who faces tough elections no later than May 17 . .
The market cut a quarter of a cut after a surprise 3.2% core inflation rate in the fourth quarter. But the cautious stance has pushed the Australian dollar by 0.2% to $0.6366.
Swaps mean that there is only 20% chance of follow-up in April, although the relocation in May is still almost fully sold for price.
Overall, the Reserve Bank of Australia (RBA) lowered its cash rate to 4.1%, the first decline since November 2020, when the pandemic crisis lowered the rate, an all-time low below 0.1%.
“While today’s policy decision recognizes the welcome progress of inflation, the board has taken caution with further policies,” the board said in a statement.
“The board’s assessment is that monetary policy is restrictive and will continue to exist after lowering the cash rate.”
The board has warned after opening the door to move in December that dissolution could stagnate if monetary policy is relaxed too early.
“At first glance, the statement shows that their default location is stable in April, but should be open in May, not far from the market price,” said Sean Callow, an analyst at ITC Markets.
The RCMP lags behind its peers in the global mitigation cycle, and Australia’s cuts are emerging as the Fed appears to be suspending its policy easing.
Throughout the Tasman Sea, New Zealand is preparing to cut another 50 basis points on Wednesday.
Inflation took off later than elsewhere than Australia, at 2.4% in the previous quarter and its target band was 2-3%. The trimming average measures, which were closely watched, also dropped to 3.2% from the previous 3.6%, and are now expected to drop to 2.7% by June.
Consumer spending has increased due to government tax cuts, and the labor market is surprisingly resilient, but not a source of inflationary pressure, all of which suggests that the economy is not screaming for continuous tax cuts.
