Australia's central bank is cautious about cutting rates further given cost pressures in a hot labour market, but it will respond if inflation slows more quickly than expected, senior officials said on Friday.

Australia’s central bank delivered its first interest rate cut. But Reserve Bank of Australia Governor Michele Bullock warned it won’t ease as aggressively as markets anticipate. The RBA lowered its cash rate by a quarter-percentage point to 4.

Australias labor market exceeded expectations in January, driven largely by gains in female employment, signaling continued economic resilience. Data from the Australian Bureau of Statistics (ABS) revealed employment

Treasury yields ended higher on Tuesday after the Reserve Bank of Australia’s caution about the likelihood of future rate cuts triggered a selloff in government debt across different countries.

The Reserve Bank of Australia isn’t committed to any course of action on interest rates with Gov. Michele Bullock cautioning that easing policy too quickly may stoke a fresh wave of inflationary pressures.

The rate cut will provide some relief to borrowers and comes as good news for Prime Minister Anthony Albanese, who is facing a tough election to be held no later than May 17.

The strength in the job market defies evidence that economic growth is weak, economists said. Borrowing costs remain high with the Reserve Bank of Australia only moving this week to deliver the first reduction in the official cash rate since 2020.

The Reserve Bank of Australia cut interest rates for the first time since 2020 on Tuesday, joining its international counterparts in the global easing cycle.

Australia’s central bank on Tuesday reduced its benchmark interest rate for the first time since October 2020 as the nation’s inflation cools. The Reserve Bank of Australia reduced the cash rate by a quarter percentage point from 4.

Australia's central bank expects underlying inflation to fall faster than previously expected as it downgraded the economic outlook, although a still tight labour market is likely to create some lingering price pressures.

The outcome of next week’s Reserve Bank of Australia policy meeting is more finely balanced than what is implied by pricing in money markets, according to a former senior manager at the central bank.

Treasurys have been under modest pressure since overnight in a "sympathy" trade with U.K. gilts and European government bonds following a decision by the Reserve Bank of Australia. "