The Reserve Bank of Australia (RBA) cut the cash rate by 25 basis points to 3.60 percent at its August 2025 meeting. This was the third reduction so far this year, bringing the official cash rate down from its 2024 peak of 4.35 percent to today’s level.
Potential impacts
- Most major banks passed on the full 25 basis point reduction to variable home loan customers within days, reducing mortgage repayments and freeing up household budgets.
- Deposit rates will adjust lower, weighing on savers but supporting consumption.
- Lower borrowing costs are expected to bolster discretionary spending and underpin a mild recovery in housing demand.
- Businesses reliant on finance will benefit from improved cash flow, while others may see a lift in consumer-driven revenues.
- The RBA emphasised it remains data-dependent and stands ready to ease further if inflation does not return sustainably to target.
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