The Reserve Bank of Australia (RBA) has held its cash rate at 4.1%, a widely expected decision that keeps monetary policy steady during a hotly contested election campaign. Governor Michele Bullock said the board did not explicitly consider a rate cut at its two-day meeting, but signalled the central bank is prepared to lower rates if a global trade war damages the economy.
Speaking after the decision, Bullock noted that inflation is coming down and unemployment remains low, but warned that rising trade protectionism, particularly from the United States, poses a significant risk. She said Australia is 'well placed' to weather any storm, with room to cut rates if needed, though the impact on inflation and the exchange rate would be key factors.
Financial markets trimmed the probability of a May rate cut from 80% to around 70% following the announcement. Westpac chief economist Luci Ellis said further cuts are likely, with the next one most probable in May. The RBA's new monetary policy board, which held its first meeting, voted by consensus to hold rates, though individual votes remain secret.
Bullock emphasised that the board remains data-dependent and cautious, as cost-of-living pressures persist for many Australians. She described the current trade environment as 'protectionism on steroids', suggesting that recent tariff policies are not temporary but part of a longer-term shift away from free trade.
