The Reserve Bank has delivered its third interest rate cut of the year, with a 0.25 percentage point reduction at its August board meeting. It was a unanimous decision and had been overwhelmingly anticipated by financial markets and economists. Independent economist Nicki Hutley told The Business the RBA has shown itself to be "overly cautious" and "risk averse" to anything that might impact inflation.
The central bank also cut interest rates at its February and May board meetings.
This latest cut now takes the cash rate to 3.6 per cent.
It follows a further easing of inflation in the June quarter, which RBA governor Michele Bullock highlighted as the crucial piece of data the monetary policy board was waiting for after its surprise decision to hold rates steady in July.
Nicki Hutley says there are likely to be two more cuts in the rate cutting cycle because the RBA's own forecast shows it can keep inflation on track. However, she notes it's impossible to know what will happen over the next six months, particularly involving Donald Trump's trade policies including US tariffs.
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