Another Interest Rates Cut in August/2025: Relief for homeowners

Reserve Bank of Australia’s decision widely anticipated by experts – although some believe cut was overdue

The Reserve Bank has delivered a much-anticipated rate cut, even as it warned Australians to brace for lower growth and wages in the future thanks to weaker productivity growth.

But tempering the welcome development for more than 3m mortgaged households was a downbeat new economic outlook that predicted “persistently” lower productivity growth than previously expected.In its latest quarterly economic outlook, the central bank confirmed inflation remained on track to hit the middle of the bank’s 2-3% legislated target in two years’ time.

Jim Chalmers has made finding ways to boost productivity a key commitment for the government’s second term, and the RBA estimates show Australians’ real incomes will grow more slowly than previously thought over coming years. The central bank’s economists conceded they have been too optimistic about the prospect for a productivity reversal, and that the problems were “persistent”.“There is a risk that our new trend productivity assumption remains too optimistic,” the RBA said.“There is also scope for some transitory boost … if the fundamental drivers of productivity become more favourable, such as faster adoption of technologies like AI or increased economic dynamism.

Rising household incomes had been saved, rather than spent, at a higher rate than expected in 2025, which the bank said could be a sign workers were already coming to terms with lower real wage growth in future.

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Source: https://au.headtopics.com/news/rba-interest-rates-decision-relief-for-borrowers-as-71924065 

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