The Reserve Bank of Australia is expected to break away from the US Federal Reserve and lower the cash rate this month because the domestic economy is acutely exposed to the prospect of a global recession and inflation is markedly slowing, even as the full impact of US tariffs is yet to be felt.

The US Federal Reserve this week held its benchmark interest rate steady at 4.25 to 4.5 per cent for a third consecutive meeting despite flagging mounting risks of higher inflation and unemployment.