Australia cuts interest rate for 1st time since 2020

By Gokhan Ergocun

ISTANBUL (AA) - The Reserve Bank of Australia lowered its policy interest rate by 25 basis points to 4.1% on Tuesday, marking the first rate cut since November 2020.

The bank began to increase the rate in May 2020 from 0.1% to 4.35% gradually till November 2023 and kept the rate constant for the last nine meetings.

"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 bank said.

"However, upside risks remain. Some recent labour market data have been unexpectedly strong, suggesting that the labour market may be somewhat tighter than previously thought," it added.

The bank underlined that there are notable uncertainties about the outlook for domestic economic activity and inflation.