Wednesday’s RBA decision was easy to predict. Future ones will be much harder as the board, and the rest of us, learn about how the growth sapping and inflation creating effects of Trump’s tariffs play out.
The Reserve Bank’s decision to cut interest rates by 25 basis point was no surprise, but it did contain some clues.
President Trump’s tariffs played a key role in the RBA’s thinking. They noted: “there is still considerable uncertainty about the final scope of the tariffs and policy responses in other countries. Geopolitical uncertainties also remain pronounced. These developments are expected to have an adverse effect on global economic activity, particularly if households and firms delay expenditure pending greater clarity on the outlook.”
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Richard Holden is scientia professor of economics at UNSW Business School. Connect with Richard on Twitter.
