Aussie edges higher following RBA rate cut

Australia acted to forestall an undue slowing in the economy which might see inflation running below target by cutting its benchmark policy rates.

At the latest Board meeting of the Reserve Bank of Australia, rate-setters Down Under cut the cash rate by 25 basis points to 1.50%, effective from 3 August.

That was as expected by the consensus of economists, although as of the close of trading in London on 1 August financial markets had been pricing in an apporximately 40.0% probability of a reduction.

Contrary to what some observers might have expected, the country´s currency rose following the announcement, leading to market-chatter that the Reserve Bank of Australia might have reached the end of the current easing cycle in its monetary policy.

"Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting," RBA governor Glenn Stevens said in a statement.

As of 08:42 BST the Australian dollar was 0.27% higher against the Greenback to 0.7756.