In May, the RBA board discussed a scenario in which there was no further improvement in the labour market and the unemployment rate remained around the 5% mark. In this scenario, they judged that inflation was likely to remain low relative to the target of 2-3% and that a decrease in the cash rate would likely be appropriate. The RBA has now delivered, by cutting the official cash rate by 0.25% to 1.25%, the first move in rates since August 2016.

Click here to listen to Martin Lakos, Division Director of Macquarie Wealth Management discuss the recent rate cut.

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