2019.10.0101:42:00UTC+00Australia Cuts Rates Further To Support Growth

Australia's central bank reduced its key interest rates for the third time this year and signaled more easing to underpin employment and income growth.

The board of the Reserve Bank of Australia, governed by Philip Lowe, decided to reduce the cash rate by 25 basis points to a record 0.75 percent. The outcome of the meeting came in line with expectations.

The bank had earlier lowered its rate in June and July. The back-to-back rate cut in July was the first since mid-2012.

The board decided to lower the rate to support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target. The economy still has spare capacity and lower interest rates will help make inroads into that, the bank noted.

"It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target," the bank said in a statement.

"The Board will continue to monitor developments, including in the labor market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time," the bank said.

Inflation is expected to be a little under 2 percent over 2020 and a little above 2 percent over 2021.

On housing market, policymakers said there are further signs of a turnaround in established housing markets, especially in Sydney and Melbourne. Nonetheless, new dwelling activity has weakened and growth in housing credit remains low.

Marcel Thieliant, an economist at Capital Economics, said the interest rate will fall to 0.50 percent before the end of the year.