RBA Rate Cut Possible Despite Eased US-China Tariffs

0

The market's expectation for RBA interventions has slightly diminished with the release of favorable labor market data. The anticipated rate cuts by year-end have dropped from four to three. Nonetheless, traders are still nearly fully betting on a 25 basis point reduction from the current 4.1% cash rate on Tuesday.

A survey by Finder revealed that nearly 90% of economists expect a cash rate cut, with Sean Langcake of Oxford Economics Australia among the 41 experts supporting this outlook. While there are positive developments on the tariff front, Langcake pointed out potential economic harm from the ongoing uncertainty. Reduced inflation risks give the RBA more room to support the economy, he stated.

Australia's four major banks all predict a rate cut, with NAB speculating a potential 50 basis point decrease. However, analysts Andrew Ticehurst and David Seif of Nomura express skepticism about such a significant cut, citing recent improvements in the US-China trade relations.

The RBA is expected to announce updated quarterly economic forecasts on Tuesday, amid an otherwise quiet week for new economic data. Concurrently, the Victorian government will release its budget, as ratings agency S&P Global warns of potential credit rating downgrades for the indebted state if spending isn't curtailed.

US markets have responded positively to the tariff reductions, marking five consecutive days of growth last week. Similarly, Australian share markets reached a three-month peak after eight days of gains.

Published:Monday, 19th May 2025
Source: Paige Estritori

Share this news item:

Finance News

Clear

Markets Respond Cautiously to U.S. Tax Changes Amid Mixed Global Trends 23 May 2025: Paige Estritori Financial markets exhibited a measured response following the U.S. administration's introduction of new tax legislation, a development that is expected to significantly increase the national deficit. Despite initial positive momentum on Wall Street, much of the gains receded by the session's end. Similarly, European markets experienced mild selloffs, signaling uncertainty among investors. In Asia, a mixed response was seen, with Australia outperforming other regional markets, although with minor losses. - read more

RBA Rate Cut Sparks Concerns Amid Rising Housing Market Outlook 21 May 2025: Paige Estritori The Reserve Bank of Australia's recent decision to reduce the cash rate by 25 basis points to 3.85 per cent has stirred reactions among young Australians and financial experts. The decision provides relief for current homeowners but poses challenges for first-time buyers due to anticipated housing price increases. - read more

Investors Shift Focus to Hedged International Equity ETFs Amid Volatility 19 May 2025: Paige Estritori New insights from InvestSMART reveal a noticeable shift in investment preferences from Australian equity Exchange Traded Funds (ETFs) to global equity ETFs, particularly hedged international equity ETFs. This development comes in light of investors' efforts to guard against currency fluctuations. - read more

RBA Rate Cut Possible Despite Eased US-China Tariffs 19 May 2025: Paige Estritori Economists are largely forecasting that the Reserve Bank of Australia (RBA) will reduce interest rates during its upcoming meeting, although recent international developments add some uncertainty to this prediction. Notably, US President Donald Trump's decision to lower tariffs on China prompted a reciprocal tariff reduction by Beijing, leading to a rise in risk asset values, including shares. - read more

Australia Records Historic Fall in Disposable Income 16 May 2025: Paige Estritori Recent data from the Australian Bureau of Statistics (ABS) revealed a historical drop in real per capita household disposable income for Australians, marking an unprecedented fall of around 8% since mid-2022. This decline represents a significant issue, with Australia experiencing the largest decrease in the developed world, according to the OECD. - read more

Record High Australian House Prices Exceed $11 Trillion 16 May 2025: Paige Estritori Australia’s housing market has reached a significant milestone, with the total value of housing stock hitting $11.3 trillion as of April 2025. According to Cotality, formerly CoreLogic, the average home is now valued at $1 million, underscoring the considerable growth in property values. - read more

ASX Hits 11-Week High Amidst US-China Tariff Pause 14 May 2025: Paige Estritori The Australian Securities Exchange (ASX) reached its highest level in 11 weeks, buoyed by the announcement of a temporary pause in tariff increases between the United States and China. The ASX 200 index climbed 35.50 points, or 0.43%, to 8,269, with standout performances from the energy and information technology sectors. Similarly, the All Ordinaries index saw a rise of 43.70 points, or 0.52%, closing at 8,510.70. The Australian dollar also appreciated, gaining 0.71% to 64.16 US cents. - read more