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Economic Buzz: RBA cuts rate to 3.85% amid easing inflation, global risks
20-May-2025 13:14
The Reserve Bank of Australia cut its cash rate by 25bps to 3.85% in May, marking the first cut since January. Inflation has eased into the 2'3% target range, prompting the move. While inflation risks are now more balanced, global trade tensions and rising U.S. tariffs have worsened the external outlook. The RBA flagged a severe downside scenario and reaffirmed its readiness to act if needed. GDP growth is still expected to recover but at a slower pace due to weaker demand and consumption. Unemployment remains steady at 4.1% as the labor market stays tight.

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