RBA cuts rate to two-year low
CBA, Westpac, ANZ cut home loan interest rate
Additional rate cuts possible this year – analyst
Aug 12 (Reuters) – Australian shares hit an all-time high on Tuesday after the country’s central bank cut interest rates for the third time in 2025, while maintaining a measured tone on future easing, prompting markets to push back hopes for the next reduction.
The S&P/ASX 200 index rose 0.4% to a record high of 8,880.8 points after the Reserve Bank of Australia cut interest rates by 25 basis points to a two-year low of 3.60% as expected, citing declining underlying inflation and slightly easing labour market conditions.
However, the board remained cautious about the economic outlook as uncertainty over growth prospects prevailed.
Rate-sensitive financial stocks led gains, rising 0.8%, with the “big four” banks up between 0.1% and 2.2%.
Commonwealth Bank, Westpac, ANZ Group and National Australia Bank quickly followed the RBA move by cutting their home loan variable rates by 25 basis points.
Markets view the rate cut as positive for credit growth and consumer sentiment, with bank loan arrears remaining low by historical standards and minimal concerns over home loan credit quality, making the move a net gain for lenders, said Lochlan Halloway, an equity analyst at Morningstar.
Futures imply only a one-in-three chance of a further easing at the next meeting in September, with most analysts assuming the RBA will choose to wait for the third-quarter inflation report due in late October before deciding whether to move in November.
Consumer discretionary stocks, which are among the biggest beneficiaries of lower interest rates, were up 0.8%.
ASX-listed shares of Life360 and Light & Wonder were among the top gainers on the broader benchmark for the day, up 7.8% and 6%, respectively.
Separately, mining stocks were up 0.5% on the back of higher iron ore futures.
BHP Group, the world’s largest listed miner, gained 1%, while Rio Tinto and Fortescue were up 1.2% each.
New Zealand’s benchmark S&P/NZX 50 index fell 1.2% to finish the session at 12,759.68 points.
The country’s central bank will hold its monetary policy meeting next week.
(Reporting by Adwitiya Srivastava in Bengaluru; Editing by Anil D’Silva)
