THE Reserve Bank of Australia (RBA) has announced its third interest rate cut of the year, reducing the cash rate by 0.25 percentage points to 3.60 per cent.
This marks the lowest level since April 2023 and follows earlier cuts in February and May, taking the total reduction in 2025 to 0.75 per cent.
The decision, made unanimously by the RBA board, was widely expected after inflation data from the June quarter showed price growth continuing to ease.
RBA Governor Michele Bullock said updated forecasts suggest underlying inflation will settle around the midpoint of the 2-3 per cent target range, and that “further easing of monetary policy was appropriate” given slightly softer labour market conditions.
Financial markets and economists are now expecting further rate cuts, with many predicting the next move in November.
AMP chief economist Shane Oliver forecasts additional reductions in November, February and May, potentially taking the cash rate to 2.85 per cent in 2026.
The rate cut has already prompted several major lenders – including Commonwealth Bank, Westpac, ANZ, NAB, Macquarie and AMP – to announce they will pass the reduction on to home loan customers. According to Canstar, a borrower with a $500,000 mortgage could save around $74 per month, while a $1 million loan could see repayments drop by about $148 per month, assuming banks pass on the cut in full.
For homeowners, this is welcome relief after a series of rapid rate rises between May 2022 and November 2023, which saw the cash rate climb from record lows to 4.35 per cent.
However, Treasurer Jim Chalmers cautioned that while the cuts eased cost-of-living pressures, households should continue to budget carefully in the current economic climate.
