The RBA has cut rates to 3.60%. Who is it going to impact?

The Reserve Bank of Australia has lowered the cash rate to 3.60%, its third cut this year — following reductions in February and May — and returning to its lowest level since April 2023. The change reflects clear evidence of inflation settling within the RBA’s 2–3% target and a loosening labour market.

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What Are Markets and Mortgage-Holders Watching Closely?

We’re not merely talking about a cut — we’re awaiting tone. Markets will be laser-focused on whether Governor Bullock describes disinflation as “sustained” or leans on cautious terms like “gradual” or “data‑dependent”. For homeowners, the change is tangible: a $500,000 mortgage could save around $74 per month, or $272 per month overall across this and prior cuts.

Broader Economic Underpinnings and Cautions

This move is rooted in clear data signals — headline inflation dropped to approximately 2.1%, and trimmed‑mean inflation eased to 2.7% — the lowest since late 2021.  . Unemployment climbed to 4.3%, easing pressure on wages and supporting the RBA’s easing bias. Yet, the RBA has downgraded growth forecasts, cutting productivity assumptions to 0.7% annually and trimming 2025 GDP outlook to 1.7%, reinforcing caution regarding how far rates should fall.

Sectors Set to Benefit — and Those Feeling the Squeeze

Borrowers are the clear winners: refinancing surged, with banks racing to offer sub‑5% home loan rates — some as low as 4.59%, offering meaningful monthly savings. Export‑linked sectors may also benefit from a weakening AUD and lower borrowing costs. Conversely, savers and retirees face real headwinds — reduced interest income is driving interest toward fixed-income ETFs and higher-yield cash accounts, where returns may reach 4.5% or more.

What Might Follow Later in 2025?

Are we close to the bottom? Many economists now expect one more 25‑basis‑point cut before year‑end, taking the cash rate to around 3.35%, potentially moving further towards 3.10% by early 2026—assuming inflation and employment trends continue to cooperate.

Cut Delivered, Questions Remain

This rate reduction brings tangible relief as inflation cools and unemployment edges higher. We believe the RBA remains data-focused and measured—no premature cheers. Investors are urged to stay agile:

• Rotate into sectors poised to benefit from lower rates.
• Lock in favourable borrowing terms now.
• Re-examine income strategies as cash yields compress.
• Keep an eye on global risks that could tilt the RBA’s next move.