The Reserve Bank of Australia board slashes the main cash rate by a quarter point to 3.6%.

Australia’s central bank cut interest rates on Tuesday (Aug 12) for a third time this year and signalled further policy easing might be needed to meet its inflation and employment goals as the economy lost some momentum.

Wrapping up a two-day policy meeting, the Reserve Bank of Australia (RBA) board cut the main cash rate by a quarter point to 3.6 per cent, saying that data suggested core inflation would moderate to around the middle of its 2 to 3 per cent target band, assuming a gradual easing in policy.

Markets had been fully priced for a cut, having been wrong-footed in July when the central bank held steady, given inflation had slowed as desired in the second quarter while unemployment had moved higher.

RBA governor Michele Bullock would not comment on whether a cash rate of 3.6 per cent was restrictive or not, but said policymakers would decide moves on a meeting-by-meeting basis to ensure the bank met its two mandates of low and stable inflation and full employment.

“Forecasts imply that the cash rate might need to be a bit lower than it is today to keep inflation low and stable and employment growing but there is still a lot of uncertainty,” said Bullock in a post-meeting decision.

She added that a decision not to cut rates at Tuesday’s meeting would have meant the central bank risked missing both of its mandates.

The central bank has emphasised caution in easing, having only cut rates after the release of the quarterly inflation data. That is why investors are wagering on a cut in November and likely another in February next year.