SYDNEY—Australia became the largest developed economy to cut interest rates in 2019, lowering borrowing costs for the first time in nearly three years to offset the effects of global trade tensions and a slowdown in China.
The move comes as market participants grow more convinced that the Federal Reserve will likely to cut rates later this year and follows a string of reductions by neighboring Asia-Pacific nations.
The Reserve Bank of Australia on Tuesday lowered its benchmark interest rate by a quarter of a percentage point to 1.25%. Some economists say the rate could go as low as 0.5% by the middle of next year.
Read: Bullard says Fed may have to cut interest rates soon due to trade wars, low inflation
In an accompanying statement, RBA Gov. Philip Lowe said the risks from trade disputes have increased. “Growth in international trade remains weak and the increased uncertainty is affecting investment intentions in a number of countries,” he added.
An expanded version of this report can be found at WSJ.com
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