All of Australia's 'big four' banks will pass on the RBA's quarter of a percentage point rate cut. Source: AAP / Joel Carrett

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'No victory yet': The Reserve Bank cuts rates from a 13-year high — as it happened

The decision followed a drop in inflation and is in line with predictions from economists and the major banks.

All of Australia's 'big four' banks will pass on the RBA's quarter of a percentage point rate cut. Source: AAP / Joel Carrett

Published 18 February 2025 12:02pm

Updated 18 February 2025 4:30pm

Source: SBS News

Reserve Bank cuts rates from a 13-year high

Thank you for joining our live coverage of the Reserve Bank of Australia's (RBA) interest rates decision.

The central bank's board cut the cash rate from a 13-year high of 4.35 per cent to 4.10 per cent today.

The widely expected move marked the first rate cut in five years and followed softer-than-expected December quarter consumer price index figures that brought annual underlying inflation close to the RBA's target band of 2-3 per cent.

The quarter of a percentage point cut
will save the average owner-occupier
with a $600,000 loan about $92 a month.
Banks
have started passing on the rate cut
— with Australia's 'big four' banks all announcing they would lower rates on their variable products.
The RBA has wanted to curb inflation to its target band of 2-3 per cent. Governor Michele Bullock said higher interest rates have been working but "we cannot declare victory yet".
Treasurer Jim Chalmers made similar remarks. Opposition Treasury spokesperson Angus Taylor said the announcement had been long overdue and Australia "has been suffering".
The RBA wrote in its statement that it remains "cautious" about easing rates further. Bullock said rates could again be hiked if inflation began to rise.

— David Aidone

4 days ago18 Feb 4:11pm

RBA board's vote was 'a consensus', Michele Bullock says

Reserve Bank governor Michele Bullock has been asked whether the board voted unanimously to lower the official cash rate from 4.35 per cent to 4.1 per cent.

She says they did.

"I think the board would allow me to say that yes, it was a consensus."

— Madeleine Wedesweiler

4 days ago18 Feb 4:11pm

'We cannot declare victory yet' RBA governor Michele Bullock says

Earlier in her press conference, Bullock said "it's clear higher interest rates have been working as anticipated".

But she told reporters: "We cannot declare victory on inflation just yet."

"It's not good enough for it to be back in the target range temporarily, the board needs to be confident it's returning to the target range sustainably."

— Madeleine Wedesweiler

4 days ago18 Feb 4:04pm

Struggling Australians do contact me, RBA governor says

Michele Bullock was asked by a reporter whether she receives letters from Australians struggling with their finances, as her predecessor Philip Lowe had mentioned.

She said she does get similar messages, adding: "My message has been in the past and continues to be — I understand that you are hurting, and I understand that mortgage rates have increased a lot and you're finding that hitting your disposal income."

"But we need to get inflation down because that's the other thing that's really hurting you.

"If we don't get inflation down, interest rates won't come down, and you'll be stuck with inflation and high interest rates. So, we have to be patient. I understand it hurts. But it's really important that we get inflation down."

— Alex Britton

4 days ago18 Feb 4:00pm

What could trigger future interest rate hikes?

Reserve Bank governor Michele Bullock was asked about the factors that would prompt the RBA board to raise interest rates again.

She said this might happen if "inflation reversed course" and started to increase.

"Now, what we've observed from overseas, we have observed it a bit here as well, it can be bumpy. It's not a smooth ride," she said.

Bullock said more information on inflation will be revealed in data in the next few months, which includes "volatile quarterly numbers".

"What we'll be looking for is continued disinflation in those. If that starts to reverse course, in a trend sense, we start to see some of the easing in prices start going back up again, that will be something the board will seriously need to consider."

— Alex Britton

4 days ago18 Feb 3:56pm

Deloitte: 'New rate cycle' could herald more cuts this year

Pradeep Philip from Deloitte Access Economics said today's decision marks "the start of a new rate cycle", adding there is a case for further cuts of up to 0.5 per cent this year.

He said the RBA board "see a weak economy, particularly in the private sector and they see inflation coming down".

"The reality is the Australian economy has been kept out of recession because of government spending. But that is not a sustainable way for the economy to operate," he told SBS News.

"We need to lift the supply side, the run rate of the economy and that will only happen if business has the confidence to go out and invest."

— Naveen Razik

4 days ago18 Feb 3:45pm

'Not one and done': Michele Bullock questioned on further rate cuts

Reserve Bank governor Michele Bullock has been asked about further rate cuts.

She said she wouldn't say the RBA's plan is "one and done".

"The market is expecting quite a few more interest rate cuts to the middle of next year, about three more on top of this," she told reporters.

"Whether or not that eventuates will tend very much on the data. Our feeling at the moment is that's far too confident. I can't say one and done. We have done one, we have removed a bit of restrictiveness, we're still restrictive, and we're waiting for more evidence we're getting inflation sustainably back in the band before we're willing to move."

— Madeleine Wedesweiler

4 days ago18 Feb 3:40pm

'Difficult decision' to cut rates, Michele Bullock says

Reserve Bank governor Michele Bullock said it was "a difficult decision" to cut interest rates.

"The board had an active debate on the arguments on both sides on this, but in the end, came to the view the better decision was to ease a little bit of the restrictiveness … in recognition, we're making progress towards our goal."

— Sara Tomevska

4 days ago18 Feb 3:37pm

Economic management key to tackling cost of living crisis, Opposition says

Angus Taylor said: "Labor's own forecasts don't get us back to the living standards they inherited back when they won the election in 2022, they don't get us back to those living standards until 2030. With further downgrades today, it's a long way back to where Australians were when Labor came to power."

"Labor doesn't know how to manage the economy. If you want to beat a cost of living crisis, the key is economic management.

"You cannot beat a cost of living crisis if you can't manage the economy. That's exactly what we've seen under Labor, seven consecutive quarters of GDP [gross domestic product] per capita going backwards, that's not good economic management."

— Alex Britton

4 days ago18 Feb 3:36pm

'Australia has been suffering' Angus Taylor says

Australian families "deserve this interest rate cut", Opposition Treasury spokesperson Angus Taylor told reporters.

"Australia has been suffering. Long-suffering Australian borrowers, small businesses, bigger businesses, and families suffering under heightened interest rates and core inflation, which has been well above target for a sustained period of time," he said.

Taylor said the announcement has been a long time coming.

"We've seen interest rate cuts in peer countries around the world of between 1 and 2 per cent, in countries including Canada, the US, Europe, New Zealand, and Australians have been suffering in the meantime with high interest rates, and in the course of the last two and a half years or so, since interest rates have been rising."

— Madeleine Wedesweiler

4 days ago18 Feb 3:33pm

Watch: Michele Bullock speaks to the media

4 days ago18 Feb 3:29pm

'Long journey back', says Opposition Treasury spokesperson Angus Taylor

Taylor says there is "more pain for Australian families".

He said: "Despite the welcome cut today, it's a long journey back to the standard of living Australians had when these interest rate increases began."

"We've seen 12 interest rate increases under Labor, and one down now, but we've also seen the biggest collapse in living standards in our history.

"It has been completely unprecedented, and unparalleled, relative to other peer countries around the world, the living standard collapse in Australia has been bigger than peer countries around the world, and indeed, in the forecast today from the Reserve Bank, there is a downgrade in living standard forecasts, despite the interest rate cut."

— Alex Britton

4 days ago18 Feb 3:14pm

Treasurer asked about cost of living relief

SBS News' Chief Political Correspondent Anna Henderson has this question for Treasurer Jim Chalmers:

"Treasurer, we've been speaking to people on the streets, they say this is just part of the puzzle, and they're still desperate for other immediate cost of living help. Will you commit in the budget to have new cost of living measures to help them?"

Chalmers says his focus is on rolling out "the very responsible but very substantial cost of living help we have already budgeted for".

"Over a long period of time, from budget to budget, we see what we can responsibly do to help people with the cost of living, that's been a feature of the first three budgets. And if we can afford it, it will be a feature of the fourth."

— Naveen Razik

4 days ago18 Feb 3:13pm

Global outlook is uncertain, people are 'under pressure'

Chalmers questioned about the RBA's view that growth is low.

He said: "We share the Reserve Bank's concern about the uncertain global outlook. I expressed that to you and in other forums for some time now."

"The world is an uncertain place and we see that reflected in the Reserve Bank's statement today.

"Growth in our economy has been soft. People have been under substantial pressure and continue to be under pressure.

"And this decision today is partly a reflection of those two things, but it's mostly a reflection of the very substantial and sustained progress we made together on inflation."

— Alex Britton

4 days ago18 Feb 3:13pm

Treasurer comments on possibility of a March budget

Treasurer Jim Chalmers was asked whether the federal budget would be announced on 25 March, a topic of interest as the federal election date remains unannounced.

His answer all but confirmed that date for the budget.

"We've been in the cabinet suite next door for most of today and most of yesterday preparing for and planning for a budget on 25 March. That's what we're working towards," he said.

"We acknowledge the timing of the election is a matter for the prime minister, in consultation with his senior colleagues. But we're working towards that budget."

— Madeleine Wedesweiler

4 days ago18 Feb 3:08pm

'Not mission accomplished', Chalmers says

Treasurer Jim Chalmers said inflation has fallen "substantially" from its 2022 peak but added there was more to be done.

He said: "Today's decision, and the statement from the board, gives us more confidence that the worst of the inflation challenge is behind us. But we're not complacent about that either."

"Today's decision is very welcome. But it's not mission accomplished because we know that people are still under pressure, and that's why the primary focus of this Albanese Labor government will continue to be the cost of living."

— Alex Britton

4 days ago18 Feb 3:08pm

Treasurer Jim Chalmers says rate cut is a 'welcome step'

Treasurer Jim Chalmers is speaking in Canberra.

He says inflation is lowered which is "the soft landing we were planning for".

"We know that this is not the solution to every challenge that people are confronting in their household budgets, but it will help, it is a welcome step when it comes to providing a bit of relief for Australians doing it tough," he said.

— Madeleine Wedesweiler

4 days ago18 Feb 3:04pm

Which banks will pass on the rate cut?

All of Australia's 'big four' banks have announced they will pass on the Reserve Bank's interest rate cut to customers.

Shortly after the official decision was published, Westpac, ANZ, NAB and CBA announced they would cut variable home loan rates by 0.25 per cent.

According to Canstar analysis, many households could save around $100 or more per month on their home loans after a single rate cut.

A table displaying monthly savings for homeowners when RBA cuts rates.

Source: SBS

— Madeleine Wedesweiler

4 days ago18 Feb 2:53pm

'Welcome news', says treasurer

We're expecting to hear from Treasurer Jim Chalmers shortly, but he has issued a statement after the rate cut.

"This is very welcome news for millions of Australians. This is the rate relief Australians need and deserve," he said.

"It won't solve every problem in our economy or in household budgets but it will help.

"This is the soft landing we have been planning for and preparing for but we know there's more work to do."

The Australian Council of Social Services described the cut as "long overdue" but urged for the next government to deliver further cost of living relief.

CEO Dr Cassandra Goldie said: "The next government will have to take more action to protect living standards. Millions of people on low and fixed incomes, many of whom do not have mortgages, need more than rate cuts."

— Alex Britton and Naveen Razik

4 days ago18 Feb 2:51pm

What's in the RBA's statement?

In its statement on cutting the official cash rate from 4.35 per cent to 4.1 per cent, the Reserve Bank of Australia (RBA) has said there are risks inflation might rise, though the board has confidence it is tracking down "sustainably".

The RBA said inflation has fallen "substantially" since the peak in 2022, with underlying inflation at 3.2 per cent in the December quarter, which was "more quickly than expected".

But it said "upside risks remain" and the board remains "cautious" about easing the official cash rate further.

This is because "the labour market may be somewhat tighter than previously thought" — labour underutilisation has declined, and business surveys and liaisons suggest the availability of labour is still a constraint for a range of employers, according to the bank.

The RBA is also concerned Australians will be spending more cash now in response to the 0.25 per cent cut announced today.

It referenced pronounced "geopolitical and policy uncertainties", not naming US President Donald Trump's tariffs as factors that could influence global markets and future rate decisions.

Ultimately, the RBA is sticking to its line that returning inflation to its target of between 2-3 per cent is its priority.

It acknowledged that monetary policy has been "restrictive" but says it will "remain so".

— Madeleine Wedesweiler