The Australian Federal Reserve announced a 25 basis point cut in official interest rates to an all-time low of 125 percent.
It is the first time since August 2016 that the Bank of Australia, or the Australian Federal Reserve, has adjusted interest rates and is widely expected.
Central Bank of Australia Governor Philip Lowe (Philip Lowe) hinted at the rate cut in a speech last month.
The futures market also included 100% of the interest rate cut by the Australian Fed in June. The futures market is also expected to cut interest rates again in October.
A survey of all 43 economics families by Louvette (Refinitiv) Consulting predicted interest rate cuts this month, and 80 per cent of them expected follow-up interest rate cuts in August.
The Australian Federal Reserve is under increasing pressure to stimulate Australia`s domestic economic, which is already clearly weak. Retail data released this morning show that consumers have cut back on spending.
Although the Australian Federal Reserve was reluctant to cut interest rates in previous months for fear of a further increase in debt for high-risk households, given that inflation has been hovering below its target range of 2 to 3 per cent for most of the past three years and that unemployment is starting to rise, The Australian Federal Reserve felt obliged to take this action.
Unemployment remains the key
"the board made this decision to support job growth and boost confidence that inflation will be consistent with medium-term targets," Bank of Australia Governor Philip Law said in a regular statement after the meeting.
"the main uncertainty at home remains the outlook for household consumption, which is affected by long-term lower income growth and falling house prices."
"Today`s decision to lower cash interest rates will help reduce economic`s spare capacity. This will help to make faster progress in reducing unemployment and make more assured progress towards achieving inflation targets."
Dr Lo did not say he would cut interest rates again, and his statement did not quell the perception that the Australian Federal Reserve had not yet finished cutting interest rates.
"the board will continue to pay close attention to the development of the labour market and adjust its monetary policy to support sustained economic growth and inflation targets," Dr. Lo concluded.
Speaking in Sydney tonight (June 4), Dr. Law will also answer questions about the first rate cut by the Australian Federal Reserve in nearly three years and the possible future direction of monetary policy.
