THE Reserve Bank of Australia (RBA) has cut the official cash rate by 0.25 percentage points, lowering it to 3.85 per cent – its lowest level since mid-2023.
Announced last week, the decision follows continued signs of easing inflation and softening household spending.
“Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance,” the RBA Board said in its official statement.
While the move is intended to ease pressure on households and stimulate economic activity, public reaction has been mixed. Online, many Australians welcomed the idea of lower mortgage repayments, but a strong theme emerged around frustration with the major banks.
Commenters questioned whether lenders would actually pass on the full cut, with some saying the decision was “nothing to celebrate” until the banks confirmed their response.
Governor Michele Bullock acknowledged the cautious consumer mood, stating, “It’s picking up a little bit lower than we thought. We expect it to pick up further following the cut, but households remain cautious.”
The RBA also left open the possibility of further rate reductions.
Market response was largely positive, with the ASX 200 rising 0.58 per cent, driven by gains in property and technology stocks. But some economists believe the cut didn’t go far enough, arguing for a more aggressive approach to safeguard growth amid global uncertainty.
NAB’s Chief Economist Sally Auld was among those calling for a 0.50 percentage point cut.
Treasurer Jim Chalmers welcomed the move but emphasised there was still work to be done.
“We are really pleased to see more help for hard-working families with a mortgage,” he said.
“It reflects the substantial and sustained progress we’ve made together on inflation, and it recognises the uncertain global environment. The job is not finished.”
Although the rate cut brings short-term relief to some borrowers, many Australians remain skeptical citing concerns about housing affordability and bank pass-through delays.
