Australia's central bank cuts rates to two-year low of 3.60%

SYDNEY, Aug 12 (Reuters) - Australia's central bank on Tuesday cut its main cash rate by a quarter point to a two-year low of 3.60%, citing a slowdown in inflation and a looser labour market, though it was cautious on the prospect of further easing.

Wrapping up a two-day policy meeting, the Reserve Bank of Australia board said data suggested core inflation would moderate to around the middle of its 2% to 3% target band even assuming a gradual easing in policy.

Markets had been fully priced for a cut, having been wrong-footed in July when the central bank held steady, given inflation had slowed as desired in the second quarter while unemployment had moved higher. AU/INT