Unanimous decision from Board suggests appetite for further monetary easing
The Reserve Bank of Australia under Governor Michele Bullock (pictured) has signalled that following its cut to 3.6% two weeks ago, more easing is likely over the coming year, though the pace will depend on the flow of data in coming months.
Minutes from the August board meeting reveal members agreed unanimously to a 25-basis-point reduction, marking the third cut this year.
The decision reflects the Bank’s confidence that inflation is heading back toward the midpoint of its 2–3%, while the labour market and overall economic conditions remain close to balance.
Further easing on the horizon
Importantly for mortgage lenders and borrowers, the RBA acknowledged that “preserving full employment while bringing inflation sustainably back to the midpoint of the target range appeared likely to require some further reduction in the cash rate over the coming year”.
The minutes suggest that while rate cuts are not guaranteed at every meeting, the bank expects monetary policy to move gradually lower in 2025 and into 2026.
Read more: Mortgage broking industry reacts to RBA interest rate call
Members weighed the case for a faster pace of reductions if labor market slack appears sooner or global conditions deteriorate, but also noted reasons to move more cautiously given inflation is still projected to hover slightly above 2.5 per cent in the medium term.
Mortgage and housing implications
The easing cycle has already filtered into mortgage rates, lowering scheduled household repayments as a share of disposable income.
The RBA noted that credit growth has picked up in line with stronger housing market activity, though new loan commitments are not yet at levels that would typically suggest an overheated market.
For mortgage professionals, this signals a supportive environment: households are benefiting from lower repayments, while lending activity is slowly regaining momentum after several sluggish years. Dwelling investment is also showing signs of recovery, supported by easier financing conditions.
Global and domestic backdrop
The RBA’s decision comes against a backdrop of resilient global growth despite US tariff pressures and policy uncertainty.
Domestically, GDP is expected to pick up gradually, with demand from both households and the public sector underpinning the recovery. Inflation, meanwhile, has eased in recent quarters, with underlying measures running at 2.7% year-on-year in June.
At the same time, the bank highlighted uncertainty around productivity growth, which it expects will remain subdued. While this downgrades the economy’s longer-term potential, the RBA does not see it altering near-term inflationary pressures.
What comes next
The board stressed that future decisions will be guided meeting-by-meeting by economic data, but market pricing aligns with expectations of at least two more rate cuts by early 2026.
For Australia’s mortgage industry, the outlook is clear: barring a sharp reversal in inflation or a surprise lift in growth, the RBA is preparing to push borrowing costs lower still. The key uncertainty lies in timing – whether cuts are delivered steadily across the year, or pulled forward if labor market slack emerges sooner than expected.
Either way, 2025 is shaping up as a year of easing that will support households, housing finance and the broader property market.
