Australian central bank cuts rates for first time since 2020

SYDNEY: Australia’s central bank cut its key interest rate Tuesday for the first time in more than four years, but warned global turmoil could derail further easing.

The Reserve Bank of Australia cut the cash rate by 0.25 percentage points to 4.1 per cent, the first time it has been lowered since November 2020. It said inflation had “fallen substantially since the peak in 2022”, but that it “remains cautious” about the prospect of further reductions in the future.

Notably, the bank pointed to the prospect of “significant” uncertainty abroad. “We cannot declare victory on inflation just yet,” bank governor Michele Bullock told reporters. “There is also a lot of uncertainty around the global outlook at the moment, and the prospect that policy unpredictably could lead to slower growth.”

Australia´s rate cut will come as welcome news for Prime Minister Anthony Albanese, who must face voters in a general election that is due by May 17 at the latest. The left-leaning Labor government has struggled to convince the public it is capable of tackling stubborn cost-of-living pressures.