Lower rates to hold AUD lower than otherwise

spare capacity likely to remain in labour market for "some time"

lower borrowing costs to free up cash for consumer spending

Board recognised uneven effect of lower rates on different households

extent of spare capacity meant rate cut unlikely to lead to risky rise in borrowing

labour demand being met by rise in participation, rather than fall in unemployment rate

Board saw prospects of lift in household income, support from tax rebates signs of stabilisation in Sydney, Melbourne housing markets

funding costs for major Australian banks had reached historic low

retail data suggested discretionary spending remained soft in Q2

Board noted significant change in outlook for monetary easing globally, esp US

risks from trade disputes remained high, inflation subdued in developed world