BREAKING: RBA Cuts Interest Rate to 3.85% as Housing Market Poised for Recovery

First Interest Rate Reduction Since 2020 Signals Economic Shift as Australia Navigates Global Uncertainties

Photo by Markus Spiske on Unsplash

In a pivotal move that signals growing confidence in Australia's inflation fight, the Reserve Bank of Australia has lowered the cash rate by 25 basis points to 3.85%, marking the first rate cut since the pandemic era and potentially triggering a significant shift in the housing market landscape.

The RBA's decision today comes as inflation has "fallen substantially" since its 2022 peak, with annual trimmed mean inflation now below 3% for the first time since 2021 and headline inflation at 2.4%, comfortably within the target band of 2-3%.

Key takeaways:

• Inflation has moderated significantly, with the RBA projecting rates to remain around the midpoint of the 2-3% target range

• Global economic uncertainties, including potential tariff wars and geopolitical tensions, factored heavily into the decision

• The housing market is expected to respond positively, with experts from KPMG, CoreLogic, and PropTrack predicting stronger growth in the second half of 2025

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