The uncertainty fuelled by Donald Trump’s on-again, off-again tariffs is pushing the Reserve Bank of Australia to plan further interest rate cuts this year, even if the erratic US president avoids a full-blown trade war.

In a dovish pivot from the central bank, the RBA not only cut the cash rate by 0.25 of a percentage point to 3.85 per cent on Tuesday, it also lowered its forecasts for economic growth and inflation. It was forced to admit that household spending would remain softer than expected, both due to domestic factors and the uncertainty caused by Trump.