Australia reduces the price of policy to the lowest level in two years, with inflation fears declining

The central bank in Australia has reduced the policy price by 25 basis points to the lowest level in the two years with the continued inflation concerns in the country, allowing the bank space to reduce monetary policy.

The Australian Reserve Bank reduced the interest rate to 3.85 %, its lowest level since May 2023, in line with the expectations of economists included in Reuters.

Australia’s enlargement was in a declining direction, with the latest number of the main address enlarged At the lowest level of four years by 2.4 % In the first quarter of 2025.

RBA said in Previous monetary policy statement The return of inflation in a sustainable goal between 2 % and 3 % “Within the reasonable time frame” is the maximum priority, although it also admitted that the expectations were unconfirmed.

The Australian economy has also witnessed a somewhat shift, as it shows reading the latest GDP Expansion by 1.3 % year on an annual basis in the fourth quarter The expansion of the first has been placed since September 2023.

However, before the RBA meeting, analysts highlighted the negative risks of the Australian economy due to global trade tensions and uncertainty about the local economy.

In the May 16 note, HSBC analysts indicated that “the global economy and financial markets have had turbulent times” since the last RBA meeting on April 1, including the assumption – and the subsequent comment – of the definitions of “Liberation Day” of US President Donald Trump.

Analysts expected a “modest negative growth impact” on the country, and they said the market shocks are likely to be slightly inflated for Australia.

This is due to the weakest global growth expected and the transformation of trade for manufactured goods from China into non -American markets, including Australia.

Karl Ang, MFS Investment Management, also noticed on May 15 that negative risks and uncertainty about economic expectations in Australia have increased significantly, due to “liberation day” and world trade policies.

He said this is likely to pay this “concrete axis of RBA”, expecting that the central bank will reach a peripheral rate of 3.1 % in early 2026.

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