Read the national news blog for rolling updates on today’s top stories.
Read the national news blog for rolling updates on today’s top stories.
Treasurer Jim Chalmers has welcomed the Reserve Bank cutting the official interest rate for the first time in more than four years.
In a post to X, Chalmers said the 0.25 per cent cut was welcome relief for Australians.
“Today’s decision by the independent Reserve Bank to lower interest rates is very welcome news for millions of Australians,” he said.
“This is the rate relief Australians need and deserve. It’s a demonstration of the substantial and sustained progress we’ve made on inflation together.
It won’t solve every problem in our economy or household budgets, but it will help. Under Labor, inflation is down, wages are up, unemployment is low, and now interest rates have started to come down too.”
Treasurer Jim Chalmers says the rate cut is “very welcome” news for Australians.
Speaking in Canberra following the Reserve Bank’s decision to cut the official interest rate for the first time in more than four years, delivering 0.25 percentage points of relief for mortgage holders, Chalmers said it was a demonstration of substantial and sustained progress made on inflation.
“This is very welcome news for millions of Australians,” Chalmers said.
“This is the rate relief that Australians need and deserve. Now, we know that it won’t fix every challenge we have in our economy and household budgets, but it will help.”
He said the decision was a demonstration of the progress Australians have made together in the fight against inflation.
“Other countries have had to pay for that kind of progress on inflation with much higher unemployment, negative quarters of growth, or even recessions,” Chalmers said.
“Australia has managed to do better than that. Under this Labor government, inflation is down, wages are up, unemployment is low, and now interest rates are falling as well.
This is the soft landing that we’ve been planning for and preparing for, but we cannot be complacent about the months and years ahead.”
While the Reserve Bank has offered much anticipated relief to mortgage-holders, the bank says the decision doesn’t mean Australia is out of the woods, dampening hopes of further rate cuts.
Lowering the cash rate from 4.35 per cent to 4.1 per cent today, the RBA board said it had more confidence that inflation was moving sustainably towards the middle of its 2 to 3 per cent target range, with price pressures having eased substantially from its peak in 2022 and faster than expected.
“However, upside risks remain,” it warned, noting the unexpectedly strong labour market.
“While today’s policy decision recognises the welcome progress on inflation, the board remains cautious on prospects for further policy easing.”
The RBA noted demand for workers increased more than the supply of workers in late 2024.
This suggests capacity constraints remain a challenge for businesses and points to possible further inflationary pressures, especially without productivity growth which has failed to pick up.
“If monetary policy is eased too much too soon, disinflation could stall, and inflation would settle above the midpoint of the target range,” it said.
“The board will continue to rely upon the data and the evolving assessment of risks to guide its decisions.
In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.”
The Australian dollar rose slightly after the Reserve Bank announced it would cut official interest rates for the first time in more than four years, while the sharemarket initially extended its losses on the news.
The Aussie dollar was trading at 63.61 US cents minutes after the central bank’s statement, up from 63.45 US cents shortly before the announcement.
The ASX 200 index initially dipped on news of the cut, but by 2.46pm it was at a similar level to where it was trading before the RBA’s 2.30pm announcement, down 0.5 per cent for the day.
The nation’s three largest lenders will cut the variable interest rates by 25 basis points.
While CBA and NAB will pass on the savings effective February 28, Westpac mortgage holders will have to wait until March 4.
Westpac said it would also cut interest for deposit customers by 0.25 percentage points from February 28, while CBA said it would maintain its current 10-month term deposit special of 4.6 per cent for a limited time.
NAB said its interest payments for customer savings were under review.
Westpac consumer chief executive Jason Yetton said the decision was welcome news for mortgage customers.
NAB chief Andrew Irvine said the high-interest rate environment had been challenging for some households, particularly those with young families.
“I think this rate reduction will really ease some of the burden,” he said.
CBA retail banking services group executive Angus Sullivan strongly encouraged anyone experiencing hardship to contact the bank so it can help with a solution that suits their circumstances.
“We recognise some customers will continue to need support as they manage household budgets,” he said.
The Reserve Bank has cut interest rates today with governor Michele Bullock announcing a quarter percentage point cut in the official cash rate, which has been at 4.35 per cent since November 2023.
As Shane Wright and Millie Muroi earlier reported a 0.25 percentage point cut is expected to reduce repayments on a $600,000 mortgage by $100 a month.
Since the bank started lifting rates before the 2022 election, repayments on that mortgage have risen by almost $1500 a month.
Use our mortgage calculator to check how much a rate cut would affect you.
One of the biggest risks to the Reserve Bank’s outlook for Australia is an escalation of global trade tensions after US President Donald Trump announced a series of tariffs which could hobble Australia’s largest trading partner.
In its statement on monetary policy today, released alongside its decision to cut the official interest rate, the RBA said it had run scenarios around higher US tariffs on China and the possible ways China could respond.
“A slowdown in Chinese growth would lead to less foreign demand for many Australian products,” the RBA said, noting it would also weigh down commodity prices given China’s outsized role in global commodity markets.
“This would reduce export and import income growth in the Australian economy.
“The RBA also said it would lead to a shift in trade patterns and create near-term disruptions to supply chains, as well as weakening productivity (a key driver of living standards and a dampener on inflationary pressures).
Increased uncertainty would also reduce both household spending and investor confidence, the bank said.
“Weaker global consumer and investor confidence will further dampen demand for Australian exports,” it said, while Australia’s exchange rate would also fall in value.
However, in good news, the RBA says for most of its scenarios, the effect on Australia’s economic output would be relatively small (up to a 0.2 percentage point fall in 12 months), largely thanks to the exchange rate which acts as a shock absorber.
The Reserve Bank has cut the official interest rate for the first time in more than four years, delivering a quarter of a percentage point relief for mortgage holders.
The RBA cut the cash rate to 4.1 per cent in a move that was widely anticipated by markets and the major banks after more than a year of rates being on hold at 4.35 per cent.
The decision, if passed on in full by the country’s retail banks, will reduce the interest repayments on a $600,000 mortgage by about $100 a month. Since the bank started lifting rates before the 2022 election, repayments on that mortgage have risen by almost $1500 a month.
Opposition Leader Peter Dutton has pledged his support for President Volodymyr Zelensky and the Ukrainian people.
In a post on social media platform X this afternoon, Dutton wrote that Australia stood proudly with Ukraine.
“The UK has provided stoic leadership, along with others, since the moment of Vladimir Putin’s barbaric invasion of Ukraine,” Dutton wrote.
“Peace and stability will prevail across Europe if the free world stands together and continues to pressure Putin. He must not be given an inch and certainly not rewarded for his murderous deeds.”
The Minns government will take the unprecedented step of shifting the date of the next state election for the first time since NSW moved to fixed terms 30 years ago.
NSW Special Minister of State John Graham told parliament on Tuesday that he will ask Governor Margaret Beazley to move the election date forward from the last Saturday in March to March 13, 2027.
This is because Easter in 2027 will fall on the final weekend in March and would make an election impossible to hold over a long weekend.
The 2027 poll will be the first time the election has fallen on the Easter weekend since four-year term parliaments were backed by voters at a referendum in 1995.