The Reserve Bank of Australia on Tuesday cut benchmark interest rates for the first time in over four years, joining ranks with other major global central banks, as softening inflation allows room for easing policy.

Three of the big four banks cut interest rates within minutes of the RBA decision on Tuesday. Here’s why they reacted so fast.

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 recent federal rate cut in Australia has been met with mixed reactions. Some right-wing media outlets have sought to criticise it as too small, while some economists have declared it a master stroke in policy patience.

Australia’s central bank has reduced its benchmark interest rate for the first time since October 2020 as the nation’s inflation cools.

The Reserve Bank of Australia on Tuesday cut its cash rate by 25 basis points to 4.10% following a monthly policy meeting.

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.

All four of Australia's major banks make their announcement just minutes after the RBA made its decision public.

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.