That will be it from us today. Thanks for joining us.
Thank you to everyone who sent comments into the blog. We're sorry that we couldn't respond to all of them. There were a lot.
If you join us back here tomorrow we'll have more post-rate cut analyses and stories to share with you.
Until tomorrow, take care of yourselves.
Shane Oliver, AMP Capital chief economist, has circulated a note on the RBA's cut rate.
He summarises things this way:
For households with mortgage repayments, he has calculated how much extra money those households will still be paying in repayments compared to before the rate hiking cycle began in May 2022.
"The latest cut means that just two of the 13 rate hikes between May 2022 and November 2023 which totalled 4.25% have been reversed," he says.
"For mortgage payments it will reverse another $1,260 of the $16,800 increase in annual payments on a $660,000 since May 2022. Or a total saving of $2,520, which still only reverses 15% of the increase in payments since May 2022."
That calculation really does illustrate how, in Australia, so much of the "heavy lifting" in the fight against inflation falls on households with mortgages.
Oliver also says the RBA appears to have become "progressively more dovish" since its February meeting.
"The RBA is no longer referring to a further tightening in the labour market, nor is it referring to the risks of easing “too much too soon”, it now sees underlying inflation back at target, it sees the risks to inflation as having become “more balanced” and its now more concerned about the threat posed by the US tariffs and sees this as being disinflationary for Australia," he says.
"And as in April, RBA Governor Bullock is no longer pushing back against market expectations for further easing as was the case in February.
"The RBA reiterated that it will “be attentive to the data and the evolving assessment of risks”, but overall, it appears to be leaving the door open for further easing."
Among the top performing individual stocks on the ASX today were TechnologyOne (up $3.74, +11.33%, to $36.76), Clarity Pharmaceuticals (up 11 cents, +5.05%, to $2.29) and Domino's Pizza (up 96 cents, +3.91%, to $25.51).
Among the worst performing stocks were Resmed (down $1.71, -4.41%, to $37.16), AUB Group (down 74 cents, -2.08%, to $34.8), and Fisher & Paykel Healthcare (down 66 cents, -1.97%, to $32.83).
Market pricing for further interest rate cuts increased after the May decision, with about a 50 per cent chance of another quarter of a percentage point reduction at the next meeting in July, according to LSEG data.
Betashares chief economist David Bassanese has forecast two more interest rate cuts this year, to take the cash rate to 3.35 per cent.
"With underlying inflation expected to fall to the mid-point of the target band, there remains a strong case for the RBA to continue to process of 'normalising' interest rates [by] reducing them from still restrictive levels," he wrote.
"If inflation falls to normal levels, so should interest rates."
While Mr Bassanese noted the potential for more cuts if the global tariff uncertainty hits global and local economic growth more than anticipated, but said it was not his base case.
"The openness of the Trump Administration to lower tariffs in exchange for trade deals has been a major development in recent weeks, and should be enough to avoid the US tumbling into a serious recession.
"But if the US does fall into recession, the RBA could easily cut rates into expansionary territory — as far as 2 per cent or even lower."
CreditorWatch chief economist Ivan Colhoun described it as "a more dovish easing" by the central bank.
"The accompanying forecasts and commentary reflect greater anticipated negative effects of US tariff policy and related uncertainties than I had expected … there remains significant uncertainty around the final scope of US tariff policy," he said.
"It's not unreasonable to expect two to three more interest rate cuts this year."
Mr Colhoun noted that the RBA's updated forecasts, which has incorporated the anticipated negative effect of tariffs, assume two further cuts to the cash rate.
"Tariff effects have seen the RBA trim its forecast recovery in GDP growth, raise its unemployment forecast very slightly, and reduce its inflation forecasts to a broadly at target 2.6 per cent throughout the forecast horizon."
As reported below, the big four banks have all passed on the Reserve Bank's 0.25 percentage point rate cut.
According to comparison site Canstar, these are all the lenders who have passed on the rate cut to home loan customers.
Macquarie Bank will also pass on the 0.25 percentage point cut for their variable home loan reference rates from 23 May (but we haven't seen what their new lowest advertised variable rate will be).
You can read more detail about interest rates here:
Trading has finished on the stock exchange today, and the ASX200 index has gained 48.2 points (+0.58%) to close on 8.343.3 points.
Hi team,
Here's what's in Victoria’s budget for the coming year (having been locked up looking at the books for several hours today).
Debt is set to balloon to record levels as the state government battles to rein in spending.
The axe looms over thousands of public sector jobs. At this stage it's 1,200 full time roles - but many of them are jobs that have expired not people that are currently filling them.
But up to 3,000 full-time employees are in the frame, with a review due in June.
Treasurer Jaclyn Symes' first state budget reveals net debt will reach $167.6 billion dollars this year, before growing to an eye-watering $194 billion dollars in three years’ time.
It will see the state pay $7.6 billion in interest this year – or $20.7 million a day. Those repayments will jump to $10.6 billion dollars annually or $29 million a day in three-years' time.
In its Statement on Monetary Policy, the Reserve Bank said that housing prices had yet to "materially respond" to easier borrowing conditions, i.e. lower interest rates.
So I asked RBA governor Michele Bullock whether that gave the board more comfort to lower interest rates further.
"Our focus has to be on inflation and, if it's the right thing to do in terms of employment and inflation is to lower interest rates, I think we have to accept what that might imply for housing because, as I said earlier, the issue for housing is supply and demand," she responded.
"And if we start thinking about, 'Well, do we lower interest rates because of housing prices?' we're going to take our eye off the ball, which is inflation, unemployment. And I don't think that would be the right thing to do.
"So I acknowledge that some people are worried that as interest rates come down, housing prices will rise.
"But other policies are really going to have to step up here and address what is a housing shortage."
RBA Governor Michele Bullock says despite inflation easing, there is uncertainty about global growth due to the US tariffs.
You can watch more here:
Tim Lawless, the research director for Cotality (formerly CoreLogic), says the RBA's rate cut will support housing markets.
However, he says people shouldn't expect a boom in housing prices until affordability improves.
He says borrowers are likely to benefit from the rate cut through lower mortgage rates, and the rate cuts should lift consumer confidence (because historically, rate cuts have tended to boost sentiment).
He says that combination of lower interest rates and improved sentiment is likely to support increased activity in the housing sector, given there is generally a correlation between consumer sentiment and home sales volumes.
"We may also see continued upward pressure on housing prices, extending the broad-based recovery in values that began after the February rate cut," he says.
But having said that, he said we shouldn't expect a "significant acceleration in capital gains."
"Several factors continue to constrain price growth, including stretched affordability, cautious lending practices, and the reality that despite 50 basis points of easing, interest rates remain in restrictive territory," he says.
"While lower rates should help to make housing more accessible, further upward pressure on prices would offset the benefits of improved loan serviceability.
"Each of the four housing affordability metrics published by Cotality were either at record highs or equal record highs at the end of last year, a reminder of the challenges many prospective home buyers face," he says.