The Reserve Bank of Australia (RBA) is anticipated to maintain the current cash rate at 4.10 per cent following its two-day meeting, with the official announcement set for 2.30pm (AEDT). This decision comes after a long-awaited cut in February, marking the first reduction in five years. Although recent inflation data suggests an improvement, with headline inflation at 2.4 per cent for the year leading to February, remaining well within the RBA’s target range, caution prevails within the bank.
The RBA’s reluctance to further lower rates today may stem from various external pressures, including the impending announcement of new tariffs by US President Donald Trump this Wednesday. Concerns that these tariffs could exacerbate inflation in both the United States and Australia, alongside potential adverse effects on economic growth, have contributed to recent declines in global stock markets. Notably, the S&P 500 on Wall Street fell by 1.3 per cent after experiencing significant losses last Friday, projecting its worst quarterly performance in nearly three years.
Prior to the release of last week’s inflation figures, economists expressed doubt regarding a rate cut today, with market predictions indicating a 92 per cent likelihood that the cash rate would remain unchanged. Additionally, the ongoing federal election campaign is likely to influence the RBA’s decision-making, as the bank aims to maintain a low profile ahead of the May 3 polling day.
Despite the uncertainty, there is some optimism for mortgage holders, as economists forecast a potential cut in the cash rate as soon as next month.