In a move that is the first of its kind since 2020, the Board of Directors of the Reserve Bank of Australia decided in its meeting this morning, Tuesday, February 18, to change its monetary policy as expected and cut interest rates by 25 basis points to reach 4.10% after the bank maintained interest rates at 4.35% since November 2023 due to high inflation.
The bank’s statement issued for the interest stated that inflation has declined significantly since its peak in 2022, supported by high interest rates, as inflation in the last quarter of last year ending in December reached 3.2%, indicating that inflationary pressures are declining faster than expected, however, upward risks remain.
The Board stressed that returning inflation to the target in a sustainable manner is the priority and that expectations indicate that if monetary policy is eased significantly soon, deflation may stop and inflation may stabilize above the midpoint of the target range, and that the Board will continue to rely on data to assess risks.