Statement on Monetary Policy – August 2025
In Brief
Inflation has continued to come down and is within our target range of 2–3 per cent. The unemployment rate has increased a little but remains low. We expect the Australian economy to grow over the next year, but uncertainty in the global economy remains high.
What is going on in the economy?
Inflation remains in our 2–3 per cent target range.
Over the past few years higher interest rates have slowed demand in the economy, which has helped bring inflation down. Although growth in the economy has slowed, spending by households and businesses has increased by more than expected over recent months.
How do we see the economy developing?
Growth in the Australian economy is expected to pick up a little over the next year.
Recent interest rate cuts are expected to support spending by households and businesses. While global economic growth is expected to slow, the risks of a very damaging trade war have eased a bit and the effect on growth in Australia is currently expected to be limited.
The unemployment rate is expected to remain steady.
We expect it to stabilise slightly below 4½ per cent, and for jobs growth to slow from very high rates.
Inflation is expected to remain in our 2–3 per cent target range.
We expect inflation to be low and stable over the next couple of years, although it will increase temporarily when some government support measures end.
What did the Monetary Policy Board decide?
At its August meeting, the Board decided to lower the cash rate to 3.60 per cent.
The Board decided it was appropriate to lower the cash rate because inflation is expected to remain around target. However, the Board remains cautious given uncertainty is high and is ready to respond if needed.