RBA Cash Rate decision - Cash Rate cut by 0.25% to 1.25% - APAC Update

. 2 min read

The Reserve Bank of Australia just announced the Cash Rate Target is cut by 0.25% to a record low of 1.25%. This was outcome was widely expected and is the first change in the Cash Rate since August 2016.

The pertinent points in the RBA’s accompanying statement were:

  • RBA’s cash rate target lowered by 0.25% to 1.25%
  • Needs faster progress in reducing unemployment
  • Took decision to support employment growth
  • Monitor developments in labour markets closely
  • Took decision to provide greater confidence on inflation
  • Outlook for global economy remains reasonable
  • To adjust policy to support sustainable growth
  • Downside risks from trade disputes have increased
  • Rate cut will help make further inroads into spare capacity
  • AUD$ at low end of narrow range of recent times
  • Central scenario for underlying inflation 1.75% in 2019, and 2% in 2020
  • Economy can sustain lower rate of unemployment
  • Central scenario for domestic economy to grow around 2.75% in 2019, 2020
  • Conditions remain soft in housing market
  • Main domestic uncertainty continues to be household consumption
  • Some pick-up in growth in household income expected, should support consumption
  • Little further inroads in spare capacity in labour market of late

The AUD is a slightly higher in immediate response.

Current indicative levels are:

AUD-USD        0.6975 / 0.7000
AUD-EUR         0.6195 / 0.6220
AUD-GBP        0.5505 / 0.5530
AUD-JPY            75.30 / 75.55
AUD-NZD        1.0590 / 1.0615

The next RBA Cash Rate policy meeting will be held on Tuesday 2nd July 2019.

Below is the link to the RBA’s media release:

https://www.rba.gov.au/media-releases/2019/mr-19-15.html

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