philip lowe : today's reduction in the cash rate speech by mr philip lowe, governor of the reserve bank of australia, at the reserve bank board dinner, sydney, 4 june 2019. * * * on behalf of the reserve bank board, i would like to warmly welcome you to this community dinner. thank you for joining us this evening. we value this opportunity to hear firsthand from you about the challenges and opportunities you face. i would also like to take advantage of the timing of this dinner to explain today ’ s decision on interest rates. as you would have heard already, earlier today the reserve bank board decided to lower the cash rate by a quarter of a percentage point to 1¼ per cent. this decision comes after more than 2½ years in which we have held the cash rate steady. the last change was back in august 2016. at its core, today ’ s decision was taken to support employment growth and to provide greater confidence that inflation will be consistent with the medium - term target. i want to emphasise that the decision is not in response to a deterioration in our economic outlook since the previous update was published in early may. the economic outlook remains reasonable, with the main downside risk being the international trade disputes, which have intensified recently. the australian economy is still expected to strengthen later this year, supported by the low level of interest rates, a pick - up in growth in household disposable income, ongoing investment in infrastructure and a brighter outlook for the resources sector. so today ’ s decision does not reflect a weaker outlook. rather it reflects the fact that, even with the expected pick - up in growth, the australian economy is likely to have spare capacity for a while yet. today ’ s easing of monetary policy will help us make further inroads into that spare capacity. it will assist with faster progress on reducing unemployment and will help achieve more assured progress towards the inflation target. so that is our rationale. i know that many of you are likely to have questions about today ’ s decision. i would like to take this opportunity to provide answers to some of your probable questions. i am also happy to answer your other questions after my prepared remarks. the four questions that i thought it would be useful to answer are the following : 1. why did the board act today, after having held the cash rate steady for more than 2½ years? 2. are there more interest rate reductions to come? 3. should today ’ s reduction be fully passed

payments. and of course payments globally continue to change apace, so we thrive on our engagement with other central banks on key topics such as standards harmonisation, where our close collaboration is a crucial part of how we can collectively transform the payments landscape. working together provides the opportunity to learn, share insights and collaborate on common challenges. conclusion just as payment systems are at the heart of the economy, industry engagement must remain at the heart of the programme. user input enables us to create the platform and capability that industry needs to innovate : the building blocks to transform the payments landscape. but as we mobilise delivery at the bank, we need industry to mobilise too. we are on track against our plan and we need firms to develop theirs – so the payments industry is ready to transition safely to the new service and maximise the opportunities for innovation and transformation promised. we are developing a strategy to work closely with direct participants to provide information, monitor key milestone completion, undertake testing and seek assurance that they are each ready to implement changes. together, we can build and promote a resilient and thriving financial system, and so i look forward to continuing to engage with many of you here – be you users, end users, suppliers, innovators, peers - to help shape and deliver a resilient and innovative payment ecosystem. https : / / www. bankofengland. co. uk / payment - and - settlement all speeches are available online at www. bankofengland. co. uk / news / speeches