RBA governor says ‘too early’ for rate cut predictions amid Donald Trump’s trade war

RBA governor Michele Bullock has cast doubt on predictions of a double rate cut in May amid Donald Trump’s ongoing tariff war.

Amid predictions of a potential double rate cut in May, with economists forecasting that Australian homeowners’ mortgage repayments could be slashed due to the United States’ ongoing trade war, Reserve Bank governor Michele Bullock has cast doubt on such a scenario.

In her speech at the Chief Executive Women annual dinner on Thursday, Ms Bullock offered a more measured outlook on the RBA’s monetary policy, acknowledging the ongoing global economic uncertainty.

She addressed the impact of the United States’ tariff announcements, noting that while volatility in financial markets is anticipated, the full economic impact will take time to unfold.

RBA governor Michele Bullock says it is ‘too early’ to determine what the path will be for interest rates. Picture: NewsWire / Nikki Short

“We’re not currently seeing the same degree of impact as previous market events like in 2008, for example. And second, the Australian financial system is strong and well placed to absorb shocks from abroad,” Ms Bullock said.

She elaborated on the RBA’s careful monitoring of factors including the responses of trading partners, potential counter responses from the US, fluctuations in the exchange rate, and adjustments in other financial markets.

“A key focus for us is how all this uncertainty is affecting decisions made by households and businesses in Australia,” she said.

Ms Bullock also confirmed that the RBA was preparing for its next monetary policy board meeting from May 19-20.

Despite ongoing uncertainty, she said the central bank was working to form a comprehensive assessment of the outlook for domestic activity and inflation.

“There are a lot of moving parts. We are bringing all this together to form an objective assessment of what it means for the outlook for domestic activity and inflation here at home,” she said.

“It’s too early for us to determine what the path will be for interest rates. Our focus remains on our dual mandate for price stability and full employment.”

Treasurer Jim Chalmers said while he doesn’t predict RBA decisions, he noted markets are clearly pricing in multiple cuts. Picture: Gaye Gerard / NewsWire

Before Ms Bullock's speech, ANZ was predicting four 0.25 per cent interest rate cuts, which could result in monthly savings of between $76 and $156 for homeowners with a $600,000 loan, depending on the size of the loan.

ANZ chief economist Richard Yetsenga has suggested that a 50 basis point (double) rate cut in May remains a possibility.

The bank expects the RBA to reduce rates in May, July, and August, with 25 basis point cuts at each meeting.

Additionally, Treasurer Jim Chalmers said the Australian dollar’s recent dip reflects concerns about China and market expectations of up to four interest rate cuts this year, starting as early as May. While he doesn’t predict RBA decisions, he noted markets are clearly pricing in multiple cuts.

Originally published as RBA governor says ‘too early’ for rate cut predictions amid Donald Trump’s trade war