Australia's central bank cuts rates

Australia's central bank yesterday cut interest rates to a twoyear low as cooling inflation at home offered scope to counter rising global trade risks, and left the door open to further easing in the months ahead.

- STELLA QIU WAYNE COLE

Wrapping up a two-day policy meeting, the Reserve Bank of Australia cut the cash rate by 25 basis points to 3.85%, saying that upside risks to inflation had diminished as the international developments are set to weigh on the economy.

The central bank considered a severe downside scenario for global trade and noted that policy was well placed to respond decisively to such risks.

RBA Governor Michele Bullock said at a post-meeting press conference the board weighed holding rates steady and cutting, and also discussed whether it should cut by 50 bps.

In contrast to her hawkish tone after the cut in February, Ms Bullock said the situation has changed, noting US President Donald Trump's April 2 tariff announcement on global imports and the still very uncertain outlook.

“Does it mean we're headed into a long series of interest rate cuts? I don’t know at this point and that’s why I think the cautious 25-basispoint cut with a recognition that if we need to move quickly, we can. We have got space.”