RBA Cuts Interest Rate Amid Cooling Inflation

21 May 2025
Sean Kum

On May 20, 2025, the Reserve Bank of Australia (RBA) reduced the official cash rate by 25 basis points, bringing it down from 4.10% to 3.85%. This marks the second rate cut this year, reflecting the central bank's response to easing inflation and a weakening global economic outlook .

The RBA's decision comes amid a decline in inflation, with the March quarter showing a 2.4% headline inflation rate and a 2.9% underlying inflation rate, aligning with the RBA's target range of 2–3% .

Banks Passing on the Rate Cut

Several banks have announced plans to pass on the full 0.25% rate cut to their customers. The following table outlines the banks and their respective dates for implementing the rate reduction:

Mortgage holders could see monthly savings ranging from $76 on a $500,000 loan to $152 on a $1 million loan, provided their lender passes on the full rate cut .

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