The Reserve Bank of Australia has kept the cash rate on hold at 3.85 per cent, likely influenced by President Trump’s decision to extend his 90-day pause on “Liberation Day” tariffs until August 1.
With inflation now at 2.1 per cent and trimmed mean at 2.4 per cent, the RBA appears comfortable that price pressures are under control, while the extended tariff pause provides additional breathing room for monetary policy decisions.
The extension of Trump’s tariff pause until August 1st gives the RBA more time to assess global trade dynamics before making significant policy adjustments.
While Australia’s economic fundamentals remain sound with unemployment steady at 4.1 per cent and GDP growth of 0.2 per cent in the March quarter, the RBA appears content to monitor how the extended pause affects global trade patterns before providing additional stimulus.
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Michele Bullock, Governor, Reserve Bank of Australia. RBA’s decision to wait suggests they want to see how global trade tensions play out, experts say.
Trump tariff extension provides breathing room
The extension of Trump’s tariff pause until August 1 reduces immediate pressure on global trade flows, giving central banks including the RBA more time to assess economic conditions. While Australia is not a major US trading partner, the potential impact on China – our largest trading partner – remains a consideration for future policy decisions.
The RBA’s decision to wait suggests they are taking advantage of the extended pause to gather more economic data before providing additional stimulus.
With further cuts still expected this year, today’s hold may prove to be a strategic pause that allows for more measured policy responses as global trade uncertainties evolve.
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Source: Ray White
Housing market momentum continues despite rate pause
The decision to hold rates comes as Australia’s housing market demonstrates remarkable momentum, with every major market now accelerating.
Perth’s extraordinary 1.3 per cent monthly growth suggests the market is again building significant steam, while Melbourne and Sydney are showing renewed vigor with 0.5 per cent monthly growth.
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Prices nationally having risen to a median of $941,000 and units to $695,000.
With house prices nationally having risen to a median of $941,000 and units to $695,000, the current growth trajectory of 7.0 per cent annually for houses and 5.2 per cent for units appears sustainable despite today’s hold.
Markets are still pricing in three rate cuts before year’s end, which means today’s pause may simply be a temporary reprieve rather than a change in direction.
English (US) · 