RBA lowers the cash rate target to 3.85% vs 4.10% prior as widely expected

• Data on inflation for the March quarter
  provided further evidence that inflation continues to ease.
• Staff forecasts released today project that
  while headline inflation is likely to rise over the coming year to around the top of the band as
  temporary factors unwind, underlying inflation is now expected to be around the midpoint of the 2–3 per cent range throughout much of the forecast period.
• While recent announcements on tariffs have resulted in a rebound in
  financial market prices, there is still considerable uncertainty about the final scope of the tariffs and
  policy responses in other countries
• These
  developments are expected to have an adverse effect on global economic activity
• World trade policy is
  changing rapidly, thereby making the central forecasts subject to considerable uncertainty.
• Private domestic demand appears to have been recovering, real
  household incomes have picked up and there has been an easing in some measures of financial stress
• A range of indicators suggest that labour market conditions remain tight
• There are uncertainties about the outlook for domestic economic activity and inflation stemming from both
  domestic and international developments
• The Board judged that the risks to inflation have become more balanced
• Inflation is in the target band
  and upside risks appear to have diminished as international developments are expected to weigh on the
  economy
• With inflation expected to remain around target, the Board therefore judged that an easing in
  monetary policy at this meeting was appropriate.
• The Board assesses that this move will make monetary
  policy somewhat less restrictive
• It nevertheless remains cautious about the outlook
• The Board considered a severe
  downside scenario and noted that monetary policy is well placed to respond decisively to international
  developments
• The Board will be attentive to the data and the evolving assessment of risks to guide its decisions
• In
  doing so, it will pay close attention to developments in the global economy and financial markets, trends
  in domestic demand, and the outlook for inflation and the labour market.

This article was written by Giuseppe Dellamotta at www.forexlive.com.