First interest rate cut in four years

Interest rates have today been cut by the Reserve Bank of Australia (RBA) for the first time since November 2020.

The move, which many anticipated after 13 successive increases, sees interest rates drop .25 basis points to 4.10 per cent.

“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 said.

“In the December quarter underlying inflation was 3.2 per cent, which suggests inflationary pressures are easing a little more quickly than expected.

“There has also been continued subdued growth in private demand and wage pressures have eased.

“These factors give the Board more confidence that inflation is moving sustainably towards the midpoint of the 2–3 per cent target range.”

The move was welcomed. Within minutes the Real Estate Institute of Queensland said it will improve “borrowing capacity and provide mortgage relief”.

REIQ CEO Antonia Mercorella said the cut was modest but significant for consumer confidence in Queensland’s property market.

“With affordability top of mind for many Queenslanders, any measure that reduces borrowing costs is a welcomed development,” Ms Mercorella said.

“This cut will make it easier for prospective home buyers to service larger loans, boosting their borrowing power.”

Ms Mercorella said economists, banks, prospective home buyers, property investors, and mortgage holders were hopeful and optimistic of more cuts this year.

But, the RBA warned “risks remain” adding “some recent labour market data have been unexpectedly strong, suggesting it may be somewhat tighter than previously thought.

“The central forecast for underlying inflation, which is based on the cash rate path implied by financial markets, has been revised up a little over 2026.

“So, while today’s policy decision recognises the welcome progress on inflation, the Board remains cautious on prospects for further policy easing.”