The Reserve Bank of Australia lowered its cash rate target by 25 basis points to 3.60% after its August board meeting, matching economists’ expectations and marking the third reduction this year. The cut takes the benchmark to its lowest since April 2023, undoing part of last year’s rapid tightening cycle. Governor Michele Bullock said the move was needed to keep inflation within the 2%-to-3% band as price pressures ease and the labour market shows signs of cooling. She reiterated that policy decisions will be taken meeting-by-meeting but noted the bank’s projections suggest the rate “might need to be a bit lower” to secure both full employment and stable prices. In its quarterly outlook, the central bank trimmed its growth assumptions, projecting GDP to expand 1.7% by end-2025, down from 2.1%, and cutting the economy’s assumed speed limit to 2.0%. It still sees CPI retreating to 3.0% next year and 2.5% by end-2027, while the jobless rate is expected to hover around 4.3%. Fresh data released a day later showed the Wage Price Index rose 0.8% quarter-on-quarter and 3.4% year-on-year in the June quarter, broadly aligning with the RBA’s forecasts. The figures, driven partly by back-dated public-sector agreements, underscore the bank’s warning that weak productivity could restrain real wage gains and complicate the path toward further easing. Interest-rate swaps imply only a one-third chance of another cut at the 2 September meeting but price in a cash rate near 3% by mid-2026. The Australian dollar slipped around 0.2% after the decision, while three-year bond futures rallied as investors assessed the prospect of additional policy support.