RBA Slashes Rates—Aussie Slides While ASX Hits Record High
A bold cut sees AUD/USD dip to ~0.65 as Australian stocks soar and homeowners cheer.
The Australian dollar dips modestly, slipping toward 0.65 USD as the Reserve Bank of Australia delivers its third interest-rate cut of the year, trimming the cash rate to 3.60 %, the lowest level since April 2023. The central bank’s unanimous decision underscores a cautious optimism: inflation is easing, but productivity worries linger—and markets are paying close attention.
As the AUD/USD pair weakens—trading at roughly 0.6494, down around 0.3 %—Australian shares surge on renewed confidence.
Across the board, the ASX 200 charges to a record high, climbing roughly 36 points (0.41 %) to 8,880.80, and the All Ordinaries follows suit, rising 0.36 % to 9,150.30. Utilities, consumer-discretionary, financials, and telecoms lead the gains.
Buyers flock to standout stocks: JB Hi-Fi leaps about 6 % to $113.85, while Aristocrat Leisure and Breville Group gain around 1.2 % and 1.3 %, respectively. The “big four” banks also rally, with ANZ up 2.2 % to $31.93. Car Group surges over 5 %, and Star Entertainment rockets 23.6 % after a major asset sale.
Borrowers are the winners today—many with variable home loans could save over $1,100 annually if banks fully pass on the rate cut. Major lenders, including Westpac, CBA, and Macquarie, have already pledged to do so.
But the central bank’s tempered tone is telling. While inflation has settled within the 2–3 % target range—headline at 2.1 %, core trimmed-mean at 2.7 %—the RBA lowered its long-term productivity estimate from 1 % to 0.7 %, a sobering reality check with implications for growth and wages.
Looking ahead, the RBA signals more easing could be on the table—officials and market watchers eye further cuts into 2026, potentially bringing the cash rate closer to a neutral ~2.85 %.
Meanwhile, markets await fresh U.S. CPI data, which may shape Fed expectations and the U.S. dollar's next move. Traders are betting on a September rate cut, but lingering price pressures could derail that if inflation surprises to the upside.