Sydney, August 11, 2025 – The Reserve Bank of Australia (RBA) is poised to reduce its official cash rate by 25 basis points, bringing it down from 3.85% to 3.60% effective August 12, 2025.

This widely anticipated decision follows a period of steady rates and recent data showing inflation easing to 2.1% – well within the RBA’s target range of 2-3%. However, the move is also driven by concerns over the economy, with the unemployment rate climbing to a 3.5-year high.

RBA to Cut Cash Rate to 3.60%
RBA to Cut Cash Rate to 3.60%


Why the RBA is Cutting Rates


Economists suggest the rate cut is aimed at stimulating consumer spending and boosting overall economic growth.


Inflation: Down from previous highs, now stable at 2.1%.

Jobs Market: Rising unemployment signals slowing demand.

Growth: A rate cut could encourage borrowing and investment.

Impact on Homeowners and Buyers

For Australian homeowners, this is welcome news. Analysts estimate:


Mortgage Relief: Average monthly repayments to drop by ~$100 for standard variable loans.

Increased Borrowing Power: Potential homebuyers could see borrowing capacity rise by ~$20,000.


Major banks including Commonwealth Bank, NAB, Westpac, and ANZ have indicated that more cuts are likely – possibly reducing the cash rate to around 3.10% by early 2026.


Market and Expert Reactions


Michele Bullock, RBA Governor, emphasized that the central bank remains committed to maintaining inflation stability while supporting employment.

“Our decision reflects the balance we must strike between keeping inflation within our target range and ensuring the economy remains resilient,” she said.

 

Leading economists predict another 25bps cut in November 2025, depending on labor market conditions.


FAQ's

Q1: When will the RBA cut the cash rate?
A: The rate cut from 3.85% to 3.60% will take effect on Tuesday, August 12, 2025.

Q2: Why is the RBA cutting interest rates now?
A: Inflation has eased to 2.1% and unemployment has risen, so the RBA is acting to boost spending and support jobs.

Q3: How much will this save me on my mortgage?
A: On average, homeowners could save about $100 per month in repayments.

Q4: Will there be more cuts?
A: Yes, many experts believe another cut could come in November 2025 and possibly early 2026.

Q5: How does this affect new homebuyers?
A: Lower rates mean cheaper repayments and a potential increase of $20,000 in borrowing capacity.