How many percentage points did the cash rate decline from 7.25% to 3%?

To determine the percentage point decline in the cash rate from 7.25% to 3%, you need to subtract the final rate from the initial rate.

So, the calculation is as follows:

7.25% - 3% = 4.25%

This means that the cash rate declined by 4.25 percentage points.

Recognizing that percentage points reflect a simple arithmetic difference between two percentages is crucial here. It highlights how much the cash rate has "fallen" in absolute terms rather than a proportion of the initial rate, which can sometimes be confused with percentage changes. The correct answer reflects this straightforward arithmetic calculation.