Global uncertainty remains, say policymakers
The Reserve Bank of Australia (RBA) under Michele Bullock (pictured) has opted to reduce the cash rate by 25 basis points, signalling the continuation of a monetary easing cycle that started with a 25bps cut in February.
In announcing today’s cut to 3.85%, the RBA pointed to easing inflation but an outlook that “remains uncertain”.
The bank said: “Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. Data on inflation for the March quarter provided further evidence that inflation continues to ease.”
However, “uncertainty in the world economy has increased over the past three months and volatility in financial markets rose sharply for a time. While recent announcements on tariffs have resulted in a rebound in financial market prices, there is still considerable uncertainty about the final scope of the tariffs and policy responses in other countries”.
The RBA’s decision aligns with the majority of industry forecasts except NAB, which anticipated a chunkier 50bps cut. More than 50% of respondents in a recent Finder survey anticipate further cuts in July and August.
An RBA press conference is scheduled for 3.30pm this afternoon.
