Interest Rate Cuts in Australia and China – Currency Thoughts
Interest Rate Cuts in Australia and China
May 20, 2025
Australia’s OCR cut of 25 basis points to a 23-month low of 3.85% today was the second such move since February, but Governor Bullock and a released statement acknowledged significant changes since that initial reduction. Price risks have diminished, while the global landscape for growth now looks much less supportive. Bullock revealed that monetary officials considered cutting the rate by 50 basis point reduction and proclaimed that “if we need to move quickly, we can.”
China’s 1- and 5-year Loan Prime Rates, which frame market rates for corporate and household loans and for mortgages were also reduced at today’s monthly fixing by ten basis points each. These were the first changes since cuts of 25 basis points last October, and their new levels of 3.0% and 3.5% had been correctly anticipated by market analysts. Chinese inflation remains too low, and officials have taken several growth-supporting actions to promote growth, which is in danger of undershooting the government’s goals.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Peoples Bank of China, Reserve Bank of Australia
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