RBA Cuts Rates as Inflation Cools and Unemployment Rises
The Reserve Bank of Australia (RBA) surprised markets by cutting its official cash rate by 0.25% to 3.6%, marking the third rate cut this year. This move comes as inflation starts to cool down, but rising unemployment has raised concerns about the strength of Australia’s economy. The RBA’s decision signals a shift to support economic growth and prevent a possible slowdown.
In its latest Statement on Monetary Policy, the RBA lowered its economic growth forecast to 2.0%, down from 2.25%. Inflation is expected to peak at 3.1% by mid-2026 and gradually fall to 2.5% by the end of 2027. Meanwhile, unemployment is predicted to hover around 4.3% through 2027, reflecting ongoing challenges in the job market.
The Australian Dollar (AUD) reacted quickly to the rate cut, slipping against the US Dollar (USD) and testing the 0.6500 level. Traders and investors are now expecting more easing from the RBA, with some experts forecasting that rates could drop further to 2.85% within the next year.
This latest rate cut sends a strong signal to the forex market: the RBA is prioritizing economic stability over fighting inflation aggressively. The AUD could remain under pressure if unemployment continues to rise or if global commodity prices weaken. However, any positive surprises in economic data or trade developments could help support the currency.
Impact:
Keep an eye on upcoming Australian jobs reports, inflation figures, and global trade news. The RBA’s future moves will heavily depend on how these factors play out. The AUD/USD pair could see more volatility as traders react to these economic updates.
