RBA makes call on interest rates at February meeting

By AAP

Feb 18, 2025

The RBA has made a decision on interest rates.

The Reserve Bank of Australia has cut interest rates for the first time in more than four years, bringing long-awaited financial relief to mortgage holders.

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As widely expected by economists and the market, the central bank's board lowered the official cash rate target by 25 basis points to 4.1 per cent on Tuesday.

The move marks the start of a much-anticipated monetary easing cycle following 13 rate rises since May 2022, which left interest rates at their highest level in 15 years.

Mortgage holders have been struggling to keep up with high interest rates, with mortgage arrears rising steadily from the record low of one per cent in mid-2022.

If lenders pass the cut on in full, borrowers with an average home loan of $641,416 can expect to save over $100 per month, according to financial comparison site Finder.

The rates market had priced in a 90 per cent chance of a cut ahead of the meeting, but economists were less certain.

Of the 32 economists polled by AAP, 22 per cent expected a hold.

But the majority expected a shallow easing cycle, regardless of the start date.

Rabobank senior macro strategist Benjamin Picton said tightness in the labour market, strengthening household consumption and the weak Australian dollar raised concerns inflation could still kick off again.