David ‘Kochie’ Koch weighs in on RBA rate cut, Donald Trump’s impact on economy

David “Kochie” Koch has weighed in on the state of play for Australia, throwing a few jabs at Donald Trump in the process.

David “Kochie” Koch has weighed in on the state of Australia’s economy following the RBA’s long-awaited rate cut on Tuesday, throwing a few jabs Australia’s relations with the US and Donald Trump’s presidency in the process.

The veteran finance guru pointed out the unfortunate truth that while the RBA’s decisions do sway the nation’s economy, Australia is still inextricably tied to the actions of one of our biggest allies - the US.

Trump’s sweeping tariffs have been a hot topic around the globe and the Reserve Bank is trembling in its boots awaiting the next bold comment to leave Mr Trump’s lips.

“You, the householder, have been doing a great job tightening your belt (and) governments are still spending too much,” Koch told Channel 7 today.

“But we’ve got this bloke overseas, Donald Trump, who we just cannot predict what he is going to do.

“A tariff war will increase prices and lead into more inflation.

“Every morning we wake up to something new Donald Trump has said, it’s sort of like an economic reality series at the moment. And that’s scaring the Reserve Bank — they want predictability.”

David “Kochie” Koch has weighed in on the state of Australia’s economy following the RBA’s long-awaited rate cut on Tuesday, throwing a few jabs at the state of Australia’s relations with the US and Donald Trump’s presidency in the process.

MORE:Call your bank: Rate cut trap revealed

Some of the unpredictability is coming from Trump’s hefty tariffs on US imports of steel and aluminium.

Australia exported roughly $430 million worth of aluminium and $639.5 million worth of steel and iron to the US in the 2023-2024 period.

But Trump is holding firm on his promise to Americans that the US will be treated with “respect” on the global stage.

“It’s 25 per cent, no exemptions, no exceptions. All countries, no matter where it [the steel and aluminium] comes from,” the US president said.

He has, however, stated that “great consideration” would be given to potentially providing Australia with immunity, noting that US surplus in trade with Australia was a factor in his decision.

Some of the unpredictability is coming from Trump’s hefty tariffs on US imports of steel and aluminium. (Photo by ANDREW CABALLERO-REYNOLDS / AFP)

Bullock’s message to Australia

RBA governor Michele Bullock has warned Aussies feeling the inflation pinch will need to “be patient”, with the fight against rising prices still raging under the hood.

“I understand you are hurting, and I understand mortgage rates have increased a lot … but we need to get inflation down because that is the other thing that is really hurting you,” she said.

“If we don’t get inflation down, interest rates won’t come down, and you’ll be stuck with inflation and high interest rates.

“So, we have to be patient. I understand it hurts. But it’s really important that we get inflation down.”

Ms Bullock’s call to “be patient” embodied the central themes of her remarks following the rate cut announcement at 2.30pm.

The Board cut rates by 25 basis points from 4.35 per cent to 4.10 per cent.

The big banks quickly followed suit and announced they would all cut their home loan rates by 0.25 per cent.

MORE:Winners and surprise losers of rate cut

RBA governor Michele Bullock has warned Aussies feeling the inflation pinch will need to “be patient”, with the fight against rising prices still raging under the hood. Picture: NewsWire/ Monique Harmer

But Ms Bullock warned repeatedly that “upside risks” remained and the Board will lift rates again if they spotted any reversal in inflation trends.

The RBA Board also said Australia’s economic outlook remained “uncertain”.

“There are notable uncertainties about the outlook for domestic economic activity and inflation,” the statement said.

“The central projection is for growth in household consumption to increase as income growth rises.

“But there is a risk that any pick-up in consumption is slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labour market than currently projected.

“Alternatively, labour market outcomes may prove stronger than expected, given the signal from a range of leading indicators.”

Kochie’s warning for homeowners

Koch urged millions of Aussies to triple-check they are now paying the lowest rate possible, warning those interested in refinancing to be aware that there usually are some costs involved.

“While new lenders may try to lure you with deals, incentives, cashbacks or rewards, also make sure these are actually giving you bang for your buck,” he said.

The savings come as separate analysis from Canstar shows the average loan size hit a record high over the December quarter.

Those interested in refinancing have been told to be aware that there usually are some costs involved. Picture: NewsWire / Damian Shaw

Despite the cash rate holding steady throughout 2024, the amount owner-occupiers have had to pay has soared due to house price growth.

The average new owner-occupier loan size has peaked in every state except Victoria in the latest quarterly lending indicator data, released last week by the ABS.

Koch has also warned house prices will rise as a result of Tuesday’s decision, with borrowers now able to secure more from their banks.

“Rather than helping people reach their property goals faster, they may just end up paying more as a result, as bigger deposits threaten to push up property prices,” he told the Daily Mail.

-- with NCA Newswire

Originally published as David ‘Kochie’ Koch weighs in on RBA rate cut, Donald Trump’s impact on economy