RBA Cuts Rates to 3.60%: What This Means for your business strategy

On 12 August, the Reserve Bank of Australia (RBA) reduced the cash rate by 0.25%, bringing it down to 3.60%. This marks the first rate cut in over a year and comes as the Board seeks to support growth amid signs of economic softening. While headline inflation remains within the RBA’s target band, ongoing weakness in consumer spending and emerging cracks in the labour market prompted the decision to act sooner rather than later.

Why the RBA moved now

• June quarter CPI confirmed inflation is easing in a sustained manner
• Labour market data shows slower job creation and rising underemployment
• Consumer spending remains subdued, especially among mortgage-holding households
• Business confidence has softened, with some sectors reporting reduced forward orders

Potential impacts

The rate cut will reduce repayment pressures for businesses and households with variable debt, potentially freeing up cash flow and stimulating spending. However, it may take time for the benefits to flow through, particularly for industries reliant on discretionary purchases. For business owners, the change presents a window to review debt exposure, consider refinancing at the lower rate, and position for potential demand uplift in the lead-up to the holiday period.

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Until next month, all the best.

Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice, and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.