The Reserve Bank of Australia lowered its benchmark interest rate by 25 basis points and signaled readiness for further easing if necessary

The Reserve Bank of Australia lowered its cash rate by 25 basis points to 3.85% from 4.10% during its May policy meeting, aligning with market expectations.

Policymakers justified the move by pointing to easing inflation and reduced uncertainty following the recent US-China trade agreement, which significantly rolled back initial tariffs.

The RBA also signaled that further policy easing remains on the table if economic conditions continue to support it.

During the post-meeting press conference, Governor Michele Bullock noted that the board had considered holding rates steady, cutting by 25 basis points, and even discussed a larger 50 basis point cut.

Compared to the more hawkish tone following February’s rate cut, Governor Bullock emphasized that the economic backdrop has shifted, allowing for a more optimistic outlook. However, she also stressed the continued uncertainty and affirmed the central bank’s readiness to act decisively should new risks emerge.