Australia Interest Rate

The strongest reason for lowering the cash rate for the first time in four years was the signal from recent inflation and wage trends, the minutes of the Reserve Bank of Australia's February meeting showed. Members noted that Q4 2024 inflation had been weaker than expected, with falling house-building costs and a slowdown in rent and insurance premium increases contributing to the decline. Wage growth had also been softer than anticipated, and expectations of a rebound had likely diminished amid lower inflation and weaker productivity growth. However, officials emphasized that the decision to slash borrowing costs did not commit them to further cuts. Economic conditions gave them more confidence in achieving inflation target and preserving most labour market gains under a lower cash rate, but they viewed this outcome was not yet assured. As a result, members remained cautious about additional policy easing, a stance also reflected in inflation forecasts based on market expectations.