👉 Background: The Reserve Bank of Australia has been sitting on its hands for a VERY long time. In fact, 13 of the last 14 cash rate meetings have seen a pause. The last time we saw a rate cut was in November 2020 - back when WAP by Cardi B was the hottest track on the radio and the hottest trend on TikTok.

👉 What happened: With inflation figures trending in the right direction, the Reserve Bank of Australia has decided to cut the cash rate by 0.25% — that means the cash rate is now sitting pretty at 4.10%. The big news is that the Big 4 banks all agreed to pass on the cash rate cut to customers.

‍👉 What else: But Michelle Bullock, the RBA Governor, has warned Aussies to cool their jets. She reckons the cash rate cut was a line-ball decision… so don’t go expecting big cuts over the next few months.

What's the key learning?

💡The RBA is walking a financial tightrope — and one wrong step can cause inflation chaos all over again. On the one hand, the RBA wants to provide financial relief to borrowers by cutting the cash rate. But on the other hand, it needs to ensure the stability of the Australian economy.

💡While the inflation number is trending in the right direction, there are still a number of concerning factors:

• We’ve got a tight labour market
• We’ve seen retail spending increase for the first time in two years
• There is uncertainty around Donald Trump’s tariffs

💡All of these factors could lead to higher inflation. So the RBA Governor is careful to warn the unlikelihood of another rate cut soon. But that ain’t stopping the Big 4 banks from predicting more rate cuts as ANZ, CommBank, NAB and Westpac reckon we’ll have several rate cuts this year.