The Reserve Bank of Australia has reduced the Cash Rate from 1.25% to 1.00% as expected. The RBA has decided to ease monetary policy to support the fostering of employment and to bring inflation to target. The Canberra-based institution sees underlying inflation at 2% in 2020 and expects headline inflation to have risen in the second quarter.
Governor Phillip Lowe and his colleagues say there are tentative signs of stabilization in the housing markets in both Sydney and Melbourne.
AUD/USD has dropped to 0.6955 in a knee-jerk reaction but has recovered swiftly. It remains shy of the 0.7000 level which it only temporarily topped recently.
From the statement, emphasis mine:
Today’s decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target. The Board will continue to monitor developments in the labour market closely and adjust monetary policy if needed to support sustainable growth in the economy and the achievement of the inflation target over time
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