Australia’s central bank on Tuesday reduced its benchmark interest rate for the first time since October 2020 as the nation’s inflation cools.

The Reserve Bank of Australia reduced the cash rate by a quarter percentage point from 4.35% to 4.1% at its first board meeting for the year. The cut was widely anticipated after inflation rose only 0.2% in the December quarter and 2.4% for calendar 2024. Annual inflation peaked at 7.8% two years earlier.

The bank manipulates interest rates to keep inflation within a target band of between 2% and 3%.

“Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance,” the board said in a statement.

Bank Governor Michele Bullock later advised against believing economic forecasts that several more rate cuts were expected this year. The board will next consider changing interest rates at its meeting on April 1. Unemployment in Australia remained at near-record low levels of 4% in December, up from 3.9% in November.

Bullock said U.S. plans to increase tariffs on trading partners had the potential to be bad for economic activity around the world.

Source: FINANCE.YAHOO